36108 Federal Register / Vol. 86, No. 128 / Thursday, July 8, 2021 / Notices 

1A copy of Issue 23, Jan. 2021, is available at 

https://files.consumerfinance.gov/f/documents/ 

cfpb_supervisory-highlights_issue-23_2021-01.pdf. 

2A copy of Issue 22, Sept. 2020, is available at 

https://files.consumerfinance.gov/f/documents/ 

cfpb_supervisory-highlights_issue-22_2020-09.pdf. 

3 If a supervisory matter is referred to the Office 

of Enforcement, Enforcement may cite additional 

violations based on these facts or uncover 

additional information that could impact the 

conclusion as to what violations may exist. 

(Arctocephalus townsendi), and 

Northern fur seals (Callorhinus ursinus), 

among others. 

Research methods include training for 

voluntary participation to the maximum 

extent feasible to (1) assess body 

condition and morphometrics, (2) 

measure metabolic rate, (3) sample 

blood, (4) attach instruments (e.g., ECG/ 

accelerometer), (5) monitor tissue blood 

flow via a portable near-infrared 

spectroscopy, heat flux tags, and 

ultrasound, (6) measure heat flow, and 

skin or body temperature (see 

application for details by method). In 

addition, receipt, import, and export 

activities are requested for marine 

mammal parts from up to 140 

individuals per taxon group (pinniped 

and cetacean) world-wide. The permit is 

requested for the maximum duration of 

5 years. 

In compliance with the National 

Environmental Policy Act of 1969 (42 

U.S.C. 4321 et seq.), an initial 

determination has been made that the 

activity proposed is categorically 

excluded from the requirement to 

prepare an environmental assessment or 

environmental impact statement. 

Concurrent with the publication of 

this notice in the Federal Register, 

NMFS is forwarding copies of the 

application to the Marine Mammal 

Commission and its Committee of 

Scientific Advisors. 

Dated: July 2, 2021. 

Julia Marie Harrison, 

Chief, Permits and Conservation Division, 

Office of Protected Resources, National 

Marine Fisheries Service. 

[FR Doc. 2021–14548 Filed 7–7–21; 8:45 am] 

BILLING CODE 3510–22–P 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

Supervisory Highlights, Issue 24, 

Summer 2021 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Supervisory highlights. 

SUMMARY: The Bureau of Consumer 

Financial Protection (CFPB or Bureau) is 

issuing its twenty fourth edition of 

Supervisory Highlights. 

DATES: The Bureau released this edition 

of the Supervisory Highlights on its 

website on June 29, 2021. The findings 

included in this report cover 

examinations in the areas of auto 

servicing, consumer reporting, debt 

collection, deposits, fair lending, 

mortgage origination, mortgage 

servicing, private education loan 

origination, payday lending, and 

student loan servicing that were 

completed from January 1, 2020 to 

December 31, 2020. 

FOR FURTHER INFORMATION CONTACT: 

Jaclyn Sellers, Counsel, at (202) 435– 

7449. If you require this document in an 

alternative electronic format, please 

contact CFPB_Accessibility@cfpb.gov. 

SUPPLEMENTARY INFORMATION: 

1. Introduction 

The consumer financial marketplace 

saw significant impacts from the 

COVID–19 pandemic beginning around 

March 2020. The Bureau of Consumer 

Financial Protection (CFPB or Bureau) 

adapted its work by, among other 

things, focusing approximately half of 

its supervisory activities on prioritized 

assessments (PAs) starting in May 2020. 

PAs were designed to obtain real-time 

information from a broad group of 

supervised entities that operate in 

markets posing elevated risk of 

consumer harm due to pandemic-related 

issues. The Bureau analyzed pandemicrelated market developments to 

determine which markets were most 

likely to pose risk to consumers. 

Observations from the Bureau’s PA 

work were detailed in a special edition 

of Supervisory Highlights, Issue 23.1

This issue of Supervisory Highlights 

covers findings from the other 

supervisory work the Bureau has 

engaged in since its last regular edition, 

Issue 22.2 The findings included in this 

report cover examinations in the areas 

of auto servicing, consumer reporting, 

debt collection, deposits, fair lending, 

mortgage origination, mortgage 

servicing, private education loan 

origination, payday lending, and 

student loan servicing that were 

completed from January 1, 2020 to 

December 31, 2020. To maintain the 

anonymity of the supervised institutions 

discussed in this edition of Supervisory 

Highlights, references to institutions 

generally are in the plural and the 

related findings pertain to one or more 

institutions unless otherwise noted. 

The information contained in 

Supervisory Highlights is disseminated 

to help institutions and the general 

public better understand how the 

Bureau examines institutions for 

compliance with Federal consumer 

financial law. Supervisory Highlights 

summarizes existing requirements 

under the law and summarizes findings 

made in the course of exercising the 

Bureau’s supervisory and enforcement 

authority.3

2. Supervisory Observations 

2.1 Auto Servicing 

The Bureau continues to examine 

auto loan servicing activities, primarily 

to assess whether entities have engaged 

in any unfair, deceptive or abusive acts 

or practices prohibited by the Consumer 

Financial Protection Act (CFPA). 

Examiners identified two unfair acts or 

practices related to lender-placed 

collateral protection insurance. 

Examiners also found unfair or 

deceptive acts or practices related to 

payment application. And examiners 

identified an unfair act or practice 

related to payoff amounts where 

consumers had ancillary product rebates 

due. 

2.1.1 Collateral Protection Insurance 

Auto finance contracts generally 

require consumers to maintain 

comprehensive and collision insurance 

that covers physical damage to the 

vehicle in order to protect the value of 

the collateral. If the consumer fails to 

maintain appropriate coverage, some 

contracts provide that servicers can 

purchase insurance for the vehicle, 

often called collateral protection 

insurance (CPI). CPI policies only cover 

damage to the vehicle. Charges for CPI 

policies are added to consumers’ 

accounts and paid on a monthly basis. 

Servicers generally use electronic 

databases to monitor whether 

consumers are maintaining adequate 

insurance coverage. If the database 

suggests that a consumer is not 

maintaining adequate coverage, the 

servicer will send a notice requesting 

proof of insurance and stating that if the 

borrower does not provide proof of 

insurance, then a CPI policy will be 

purchased at the consumer’s expense. 

When the CPI policy is purchased, the 

servicer sends the consumer another 

notice with information about the 

policy. If the consumer later proves that 

they had adequate insurance during any 

portion of the CPI policy period, the 

servicer will generally remove any CPI 

charges for that period. Examiners 

identified unfair and deceptive acts or 

practices related to placement and 

removal of CPI policies and charges. 


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4 12 U.S.C. 5531, 5536. 

2.1.2 Charging for Unnecessary CPI 

Under the prohibition on unfair acts 

or practices in sections 1031 and 1036 

of the CFPA, an act or practice is unfair 

when: (1) It causes or is likely to cause 

substantial injury; (2) the injury is not 

reasonably avoidable by consumers; and 

(3) the substantial injury is not 

outweighed by countervailing benefits 

to consumers or to competition. 

Examiners found that servicers 

engaged in an unfair act or practice by 

charging consumers for unnecessary 

CPI. 

Servicers caused consumers 

substantial injury by adding and 

maintaining charges for CPI premiums 

as a result of deficient processes when 

consumers had adequate insurance in 

place under their contracts. If a 

consumer has an adequate insurance 

policy that covers the vehicle, the CPI 

policy provides no benefit to the 

servicer or consumer. Placing or 

maintaining charges for CPI when 

consumers have adequate insurance 

causes consumers injury because 

consumers must either pay for the 

duplicative insurance or incur late fees 

or other consequences of delinquency. 

Additionally, some servicers caused 

additional injury because they applied 

any refunds of paid CPI charges to 

principal instead of returning those 

amounts directly to the consumer. 

Consumers could not reasonably avoid 

the injury for at least three reasons. 

First, in many instances, servicers sent 

notices regarding CPI charges to 

inaccurate addresses, so consumers had 

no notice that servicers planned to place 

CPI. Second, servicers did not have 

adequate procedures for processing 

insurance cards submitted by 

consumers as proof of insurance. Third, 

in many instances, servicers failed to 

process insurance documentation from 

consumers. The substantial injury to 

consumers was not outweighed by any 

countervailing benefits to consumers or 

competition, such as the cost of 

improving notices and improving 

document processing. Servicers have 

ceased issuing CPI policies. 

2.1.3 Charging for CPI After 

Repossession 

Examiners found that servicers 

engaged in unfair acts or practices by 

collecting or attempting to collect CPI 

premiums after repossession even 

though no actual insurance protection 

was provided for those periods. 

CPI automatically terminates on the 

date of repossession, per the terms of 

the contract, and consumers should not 

be charged after this date. Despite this, 

servicers charged consumers for CPI 

after repossession in four different 

circumstances. First, servicers failed to 

communicate the date of repossession to 

the CPI service provider due to system 

errors. Second, servicers used an 

incorrect formula to calculate the CPI 

charges that needed to be removed due 

to the repossession. Third, servicers’ 

employees entered the wrong 

repossession date into their system of 

record, resulting in improper 

termination dates. Fourth, servicers 

charged consumers—who had a vehicle 

repossessed and subsequently reinstated 

the loan—for the days the vehicle was 

in the servicer’s possession, despite the 

automatic termination of the policy on 

the date of repossession. 

These errors caused consumers 

substantial injury because they paid 

amounts they did not owe or were 

subject to collection attempts for 

amounts they did not owe. This injury 

was not reasonably avoidable because 

consumers did not control the servicers’ 

cancellation processes and did not have 

a reasonable way to determine that the 

charges were inaccurate. The substantial 

injury to consumers was not outweighed 

by any countervailing benefits to 

consumers or competition. Servicers 

have ceased issuing CPI policies. 

2.1.4 Inaccurate Payment Posting 

Examiners found that servicers 

engaged in unfair acts or practices by 

posting payments to the wrong account 

or by posting certain payments as 

principal-only payments instead of 

periodic installment payments, resulting 

in late fees and additional interest 

charges. Servicers engaged in two types 

of errors.4 First, some payments were 

applied to the wrong loan account, 

despite the consumer providing their 

account information. Second, for some 

payment types, servicer employees 

applied the payment as a principal-only 

payment instead of a periodic payment. 

In both instances, consumers’ accounts 

were marked as delinquent for the 

month they made the payment, resulting 

in late fees and additional interest. 

Servicers did not have a reliable method 

to detect the errors, and primarily relied 

on consumer complaints to identify 

misapplied payments. In some 

instances, even when consumers 

complained, the servicers did not 

provide refunds. 

This conduct caused or was likely to 

cause substantial injury to consumers 

because the servicers misapplied 

payments, resulting in late fees and 

additional interest. Consumers could 

not reasonably avoid the injury because 

they had no control over the servicers’ 

misapplication of their payments. Even 

if consumers contacted the servicers 

regarding the errors, late fees and 

interest had accrued. The injury was not 

outweighed by countervailing benefits 

to consumers or competition. For 

example, servicers could improve their 

procedures to reduce the error rate. In 

response to examiner findings, servicers 

remediated affected consumers and 

implemented new automated systems. 

2.1.5 Failure To Follow Disclosed 

Payment Application Order 

Under the prohibition against 

deceptive acts or practices in sections 

1031 and 1036 of the CFPA, an act or 

practice is deceptive when: (1) It 

misleads or is likely to mislead the 

consumer; (2) the consumer’s 

interpretation is reasonable under the 

circumstances; and (3) the misleading 

act or practice is material. 

Examiners found that servicers 

engaged in deceptive acts or practices 

by representing on their websites a 

specific payment application order, and 

subsequently applying payments in a 

different order. Specifically, servicers 

represented on their websites that 

payments would be applied to interest, 

then principal, then past due payments, 

before being applied to other charges, 

such as late fees. Instead, the servicers 

applied partial payments to late fees 

first, in contravention of the 

methodology disclosed on the website. 

As the result of applying payments to 

late fees first, servicers repossessed 

some consumers’ vehicles. 

The representation that payments 

would be applied to interest, then 

principal, then past due payments, and 

then other charges was likely to mislead 

consumers because the servicers 

actually applied payments to late fees 

first. It was reasonable for consumers 

under the circumstances to believe that 

the servicers’ websites provided 

accurate information about payment 

allocation order. In some instances, the 

underlying contract provides the 

servicer the right to apply payments in 

any order. But consumers reasonably 

relied on the representations on 

servicers’ websites regarding payment 

application. And the representation was 

material because it was likely to affect 

consumers’ decisions about how much 

to pay. Servicers remediated impacted 

consumers and now use the disclosed 

payment application hierarchy. 

2.1.6 Inaccurate Payoff Amounts 

Examiners found that servicers 

engaged in unfair acts or practices by 

accepting loan payoff amounts that 

included overcharges for optional 

products after incorrectly telling 


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5 Id. 

6The term ‘‘consumer reporting company’’ means 

the same as ‘‘consumer reporting agency,’’ as 

defined in the Fair Credit Reporting Act, 15 U.S.C. 

1681a(f), including nationwide consumer reporting 

agencies as defined in 15 U.S.C. 1681a(p) and 

nationwide specialty consumer reporting agencies 

as defined in 15 U.S.C. 1681a(x). 

7 15 U.S.C. 1681 et seq. 

8 12 CFR part 1022. 

9 15 U.S.C. 1681a(p). 

10 15 U.S.C. 1681e(b). 

11 15 U.S.C. 1681c–1(i)(2)(A). 

12 15 U.S.C. 1681c–1(i)(2)(A)(ii). 

13 15 U.S.C. 1681c–2(a). 

14 Id. 

15 15 U.S.C. 1681s–2(a)(2)(B). 

consumers that they owed this larger 

amount.5

Consumers financed the purchase of 

the optional product by adding it to the 

loan amount of a vehicle purchase. The 

contracts provided that consumers or 

servicers could cancel the product at 

any time and receive a ‘‘pro-rata’’ refund 

less a cancellation fee. Servicers 

prepared payoff statements in response 

to consumers’ requests that included a 

line listing credits for refunds from 

optional products and a total ‘‘payoff 

amount.’’ Servicers calculated this 

refund based on the actuarial value of 

the policies, instead of using the prorata calculation specified in the 

contract. In some instances, this 

resulted in payoff statements that listed 

a total amount due that was larger than 

the amount the consumer owed. 

The conduct caused or was likely to 

cause substantial injury to consumers 

because servicers accepted money from 

consumers that the consumers did not 

actually owe. Consumers could not 

reasonably avoid the injury because 

they paid the servicers the amount they 

told them they owed. Consumers are not 

required to independently verify that 

servicers correctly calculated optional 

product refund amounts and therefore 

the injury could not be reasonably 

avoided. The injury is not outweighed 

by countervailing benefits to consumers 

or competition. Servicers can update 

their systems to perform appropriate 

calculations without significant cost. 

Servicers have refunded overpayments 

to consumers and updated their systems 

to perform calculations that are 

consistent with the contract terms. 

2.2 Consumer Reporting 

Entities that obtain or use consumer 

reports from consumer reporting 

companies (CRCs),6 or that furnish 

information relating to consumers for 

inclusion in consumer reports, play a 

vital role in the consumer reporting 

process. They are subject to several 

requirements under the Fair Credit 

Reporting Act (FCRA) 7 and its 

implementing regulation, Regulation V.8

These include the requirement to 

furnish data subject to the relevant 

accuracy and dispute handling 

requirements. In recent reviews, 

examiners found deficiencies in, among 

other things, CRCs’ compliance with 

FCRA: (i) Accuracy requirements, (ii) 

security freeze requirements applicable 

only for nationwide CRCs as defined in 

FCRA section 603(p),9 and (iii) 

requirements regarding ID theft block 

requests. Examiners also found 

deficiencies in furnisher compliance 

with FCRA and Regulation V accuracy 

and dispute investigation requirements. 

2.2.1 CRC Duty To Follow Reasonable 

Procedures To Assure Maximum 

Possible Accuracy 

The FCRA requires that, whenever a 

CRC ‘‘prepares a consumer report it 

shall follow reasonable procedures to 

assure maximum possible accuracy of 

the information concerning the 

individual about whom the report 

relates.’’ 10 In reviews of CRCs, 

examiners found that CRCs’ accuracy 

procedures failed to comply with this 

obligation because the CRC continued to 

include information in consumer 

reports that was provided by unreliable 

furnishers. Specifically, the furnishers 

had responded to disputes in ways that 

suggested that the furnishers were no 

longer sources of reliable, verifiable 

information about consumers. For 

example, CRCs received furnisher 

dispute responses indicating that, for 

several months, furnishers failed to 

respond to all or nearly all disputes, 

deleted all or nearly all tradelines 

disputed by consumers, or verified as 

accurate all or nearly all tradelines 

disputed by consumers. Despite 

observing this dispute response 

behavior by these furnishers, CRCs 

continued to include information from 

these furnishers. After identification of 

these issues, CRCs were directed to 

revise their accuracy procedures to 

identify and take corrective action 

regarding data from furnishers whose 

dispute response behavior indicates the 

furnisher is not a source of reliable, 

verifiable information about consumers. 

2.2.2 CRC Duty To Timely Place 

Security Freezes on Consumer Reports 

Upon Consumer Request 

The FCRA requires that nationwide 

CRCs must, free of charge, place a 

security freeze on a consumer’s report 

‘‘upon receiving a direct request from a 

consumer’’ and upon ‘‘receiving proper 

identification from the 

consumer. . . .’’ 11 The security freeze 

must be placed not later than ‘‘(ii) in the 

case of a request that is by mail, 3 

business days after receiving the request 

directly from the consumer.’’ 12 In 

reviews of nationwide CRCs, examiners 

found that CRCs failed to place security 

freezes within three business days after 

receiving the request by mail. One root 

cause was determined to be inadequate 

training, and to address that root cause, 

targeted training to appropriate staff 

regarding the requirements and timing 

of placing security freezes was 

provided. 

2.2.3 CRC Duty To Block Reporting of 

Information Identified as Resulting 

From Identity Theft 

The FCRA requires that CRCs must 

‘‘block the reporting of any information 

in the file of a consumer that the 

consumer identifies as information that 

resulted from an alleged identity 

theft. . . .’’ 13 The block must be made 

‘‘not later than 4 business days after the 

date of receipt’’ of a qualifying block 

request.14 In reviews of CRCs, examiners 

found that CRCs failed to place ID theft 

blocks within four business days of 

receipt of qualifying block requests. The 

block requests were delayed due to a 

backlog that the CRCs subsequently 

resolved. In response to these issues, the 

CRCs updated policies and procedures 

to ensure the timely processing and 

blocking of information identified in ID 

theft block requests. 

2.2.4 Furnisher Duty To Update and 

Correct Information 

The FCRA requires that persons who 

regularly and in the ordinary course of 

business furnish information to CRCs 

about that person’s transactions or 

experiences with consumers must, upon 

determining that information furnished 

to CRCs is not complete or accurate, 

‘‘promptly notify the consumer 

reporting agency of that determination.’’ 

The furnisher must then provide to the 

agency any corrections to that 

information, or any additional 

information, that is necessary to make 

the information provided by the person 

to the agency complete and accurate, 

and shall not thereafter furnish to the 

agency any of the information that 

remains not complete or accurate.’’ 15

In a review of auto loan furnishers, 

examiners found that furnishers failed 

to send updating or correcting 

information to CRCs after making a 

determination that information 

furnishers had reported was no longer 

accurate. For example, examiners found 

that after consumers had applied for an 

auto loan but later communicated they 


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16 12 CFR 1022.43(e)(1). 

17 12 CFR 1022.43(f)(1). 

18 12 CFR 1022.43(f)(2). 

19 12 CFR 1022.43(f)(3). 

20 15 U.S.C. 1692c(a)(3). 

21 15 U.S.C. 1692c(a). 

22 15 U.S.C. 1692c(a)(1). 

23 15 U.S.C. 1692c(b). 

24 15 U.S.C. 1692b, c(b). 

25 15 U.S.C. 1692b(1). 

26 15 U.S.C. 1692c(c). 

no longer wanted to proceed with the 

loan, and the furnisher had removed the 

loan from its system of record, the 

furnisher continued to furnish 

information to CRCs as though the loans 

had been issued rather than cancelled. 

Furnishers attributed the errors to 

failures by a service provider to follow 

furnisher’s procedures. Following 

identification of these issues furnishers 

implemented a new process that 

reconciles loan cancellations and 

removals of loans from the system of 

record with responsive corrections to 

CRCs. 

2.2.5 Furnisher Duty To Conduct 

Reasonable Investigation of Direct 

Disputes 

Regulation V requires that, after 

receiving a direct dispute notice from a 

consumer, a furnisher must ‘‘[c]onduct 

a reasonable investigation with respect 

to the disputed information....16

Further, Regulation V provides that a 

‘‘furnisher is not required to investigate 

a direct dispute if the furnisher has 

reasonably determined that the dispute 

is frivolous or irrelevant.’’ 17 However, if 

a furnisher determines that a dispute is 

frivolous or irrelevant, the furnisher 

must ‘‘notify the consumer of the 

determination not later than five 

business days after making the 

determination, by mail or, if authorized 

by the consumer for that purpose, by 

any other means available to the 

furnisher.’’ 18 The notice must ‘‘include 

the reasons for such determination and 

identify any information required to 

investigate the disputed information, 

which notice may consist of a 

standardized form describing the 

general nature of such information.’’ 19

In reviews of mortgage furnishers, 

examiners found that furnishers failed 

to conduct reasonable investigations of 

direct disputes. Furnishers’ dispute 

procedures instructed their direct 

dispute investigating agents to verify 

that consumers’ signatures matched the 

signature on file and, if they did not 

match, send a letter to the borrower 

stating that the information provided in 

the dispute did not match the 

furnishers’ records. Examiners found 

that furnishers’ agents had sent such 

letters to consumers whose dispute 

letters included only a typed name or 

electronic image of a signature. 

Furnishers’ agents did so without: 

Conducting an investigation of such 

disputes, otherwise reasonably 

determining that such disputes were 

frivolous or irrelevant, or providing any 

qualifying frivolous or irrelevant notices 

to consumers. After identification of 

these issues, furnishers updated their 

policies and procedures to define 

circumstances when disputes should 

reasonably be deemed frivolous because 

they appear to have originated from 

credit repair organizations; furnishers 

also created templates to send to 

consumers whose disputes they deemed 

frivolous. Further, furnishers provided 

training to agents on the new policies 

and procedures and the new letter 

templates. 

2.3 Debt Collection 

The Bureau has the supervisory 

authority to examine certain entities 

that engage in consumer debt collection 

activities, including nonbanks that are 

larger participants in the consumer debt 

collection market and nonbanks that are 

service providers to certain covered 

persons. Recent examinations of larger 

participant debt collectors identified 

violations of the Fair Debt Collection 

Practices Act (FDCPA). 

2.3.1 Prohibited Calls to Consumer’s 

Workplace 

Section 805(a)(3) of the FDCPA 

prohibits a debt collector from 

communicating with a consumer in 

connection with the collection of a debt 

at the consumer’s workplace if the debt 

collector knows or has reason to know 

that the consumer’s employer prohibits 

such communications.20 Examiners 

determined that debt collectors 

communicated with consumers at their 

workplaces after they knew or should 

have known that the consumers’ 

employers prohibit such 

communications, in violation of section 

805(a)(3). In response to these findings, 

the collectors are improving their 

training and monitoring. 

In addition, section 805(a) of the 

FDCPA restricts the circumstances 

under which a debt collector may 

contact a consumer.21 Specifically, 

section 805(a)(1) prohibits a debt 

collector from communicating with a 

consumer in connection with the 

collection of any debt at a time or place 

that the collector knows or should know 

is inconvenient to the consumer.22

Examiners found that debt collectors 

communicated with consumers at their 

places of employment during work 

hours when the debt collectors knew or 

should have known that calls during 

work hours were inconvenient to the 

consumers, in violation of section 

805(a)(1). For example, one debt 

collector called a consumer during work 

hours at a time the consumer had 

previously specified as inconvenient. 

Another debt collector called a 

consumer on a workplace phone 

number after being informed by the 

consumer that calls to the workplace 

number were inconvenient. In response 

to these findings, the collectors are 

improving their training and 

monitoring. 

2.3.2 Communication With Third 

Parties 

Section 805(b) of the FDCPA prohibits 

a debt collector from communicating in 

connection with the collection of a debt 

with any person other than the 

consumer and certain other parties.23

Exceptions to this prohibition are set 

out in sections 804 and 805(b).24

Examiners found that debt collectors 

communicated with third parties in 

violation of section 805(b). The 

communications were not within an 

exception listed in sections 804 or 

805(b). This violation of the FDCPA 

resulted from inadequate compliance 

controls to verify right-party contact 

during efforts to locate the consumer. In 

several instances, the third party had a 

name similar to the consumer’s name. In 

response to this finding, the collectors 

are improving various aspects of their 

compliance management systems 

(CMS). 

In addition, section 804(1) of the 

FDCPA states that, when 

communicating with third parties for 

the purpose of acquiring location 

information for the consumer, a debt 

collector may only disclose the name of 

their employer if expressly requested.25

Examiners observed that debt collectors 

identified their employers when 

communicating with third parties who 

had not expressly requested it, in 

violation of section 804(1). In response 

to these findings, the collectors are 

improving their training and 

monitoring. 

2.3.3 Failure To Cease Communication 

Upon Written Request or Refusal To Pay 

Section 805(c) of the FDCPA provides 

that if a consumer notifies a debt 

collector in writing that the consumer 

wishes the collector to cease further 

communication or that the consumer 

refuses to pay the debt, the collector 

must cease further communication with 

the consumer, with certain 

exceptions.26 Examiners found that a 


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27 15 U.S.C. 1692d. 

28 15 U.S.C. 1692e. 

29 15 U.S.C. 1692e(8). 

30 15 U.S.C. 1692e. 

31See CFPB Bulletin 2013–08, ‘‘Representations 

Regarding Effect of Debt Payments on Credit 

Reports and Scores’’ (July 10, 2013). 

32 15 U.S.C. 1692f. 

33 15 U.S.C. 1692f(1). 

34 15 U.S.C. 1692f. 

35 15 U.S.C. 1692g(a). 

36 12 CFR part 1005 et seq. 

37 15 U.S.C. 1693 et seq. 

38 12 CFR part 1030 et seq. 

39 12 U.S.C. 4301 et seq. 

40 12 U.S.C. 5531, 5536. 

consumer used a model form to mail a 

written statement to a debt collector 

stating that the debt was the result of 

identity theft, requesting that the 

collector cease further communication, 

and requesting that the collector provide 

confirmation along with information 

concerning the disputed account. After 

receiving this form, the collector 

continued attempts to collect the debt 

from the consumer in violation of 

FDCPA section 805(c). These attempts 

were not efforts to respond to the 

consumer’s request for information 

about the identity theft claim. In 

response to these findings, the collector 

is improving board and management 

oversight and monitoring. 

2.3.4 Harassment Regarding Inability 

To Pay 

Section 806 of the FDCPA prohibits a 

debt collector from engaging in any 

conduct the natural consequence of 

which is to harass, oppress, or abuse 

any person in connection with the 

collection of a debt.27 Examiners found 

when consumers stated they were 

unable to make or complete payment 

arrangements, debt collectors 

emphasized two or more times to each 

of the consumers that the collector 

would place a note in the account 

system stating that the consumer was 

refusing to make a payment. The natural 

consequence of these inaccurate 

statements was to harass or oppress the 

consumers, in violation of section 806. 

In response to these finding, the 

collectors are improving their training 

and monitoring. 

2.3.5 Communicating, and Threatening 

To Communicate, False Credit 

Information 

Section 807 of the FDCPA prohibits a 

debt collector from using any false, 

deceptive, or misleading representation 

or means in connection with the 

collection of any debt.28 Section 807(8) 

specifically prohibits communicating or 

threatening to communicate credit 

information which is known or which 

should be known to be false, including 

the failure to communicate that a 

disputed debt is disputed.29 Examiners 

found that debt collectors knew or 

should have known that debts were 

disputed, resulted from identity theft, 

and were not owed by the relevant 

consumers. Nonetheless, in these 

circumstances, the collectors threatened 

to report to CRCs that the consumer 

owed the debt if it was not paid. The 

collectors then reported the debt to 

CRCs and failed to report that the 

consumer disputed the debt. This 

course of action violated section 807(8) 

of the FDCPA. In response to these 

finding, the collectors are improving 

their training. 

2.3.6 False Representations or 

Deceptive Means of Collection 

Section 807(10) of the FDCPA 

prohibits a debt collector from using any 

false, deceptive, or misleading 

representation or means in connection 

with the collection of any debt or obtain 

information concerning a consumer.30

Examiners found that several debt 

collectors falsely represented to 

consumers the impact that paying off 

their debts would have on their credit 

profiles, in violation of section 

807(10).31 For example, one debt 

collector told a consumer the debt 

would no longer ‘‘impact’’ her credit 

profile once paid, which was false. 

Another debt collector told a consumer 

that making a payment would help to 

‘‘fix’’ the consumer’s credit. In response 

to this finding, the collectors are 

improving various aspects of their CMS. 

2.3.7 Incorrect Systemic 

Implementation of State Interest Rate 

Cap 

Section 808 of the FDCPA states that 

a debt collector may not use unfair or 

unconscionable means to collect or 

attempt to collect any debt.32 Section 

808(1) specifically designates ‘‘the 

collection of any amount . . . unless 

such amount is expressly authorized by 

the agreement creating the debt or 

permitted by law’’ as an unfair 

practice.33 Examiners found that debt 

collectors entered inaccurate 

information regarding State interest rate 

caps into an automated system, 

resulting in some consumers being 

overcharged, in violation of section 

808(1). In response to these findings, the 

collectors remediated impacted 

consumers and are improving their 

training and monitoring. 

2.3.8 Unlawful Initiation of 

Administrative Wage Garnishment 

During Consolidation Process 

Section 808 of the FDCPA states that 

a debt collector may not use unfair or 

unconscionable means to collect or 

attempt to collect any debt.34 Examiners 

found that debt collectors sent 

administrative wage garnishment orders 

to consumers’ employers by mistake 

despite having received completed 

applications from the consumers to 

consolidate the debt, which should have 

stopped the wage garnishment process 

based on standard procedures, in 

violation of section 808. In response to 

these findings, the collectors are 

improving their training and 

monitoring. 

2.3.9 Failure To Send Complete 

Validation Notices 

Section 809(a) of the FDCPA requires 

a debt collector to send a notice 

containing certain information 

(commonly called a ‘‘validation notice’’) 

to the consumer within five days after 

the initial communication with the 

consumer, with certain exceptions.35

Examiners found that debt collectors 

violated section 809(a) by sending 

validation notices that lacked some of 

the required information. Examiners 

found that the issue resulted from 

template changes that had not been 

reviewed by compliance personnel. In 

response to these findings, the collectors 

are improving their board and 

management oversight of new letter 

templates. 

2.4 Deposits 

The CFPB continues its examinations 

of financial institutions for compliance 

with Regulation E,36 which implements 

the Electronic Fund Transfer Act 

(EFTA).37 The CFPB also examines for 

compliance with other relevant statutes 

and regulations, including Regulation 

DD,38 which implements the Truth in 

Savings Act,39 and the Dodd-Frank Act’s 

prohibition on unfair, deceptive, or 

abusive acts or practices (UDAAPs).40

2.4.1 Regulation E Error Resolution 

Violations 

EFTA establishes a legal framework 

for the offering and use of electronic 

fund transfer (EFT) services. One of the 

primary objectives of the EFTA and its 

implementing regulation, Regulation E, 

is to protect consumers engaging in 

EFTs. 

Supervision continues to find 

violations of EFTA and Regulation E 

that it previously discussed in the Fall 

2014, Summer 2017, and Summer 2020 

editions of Supervisory Highlights, 

respectively. These violations include: 

• Requiring written confirmation of 

an oral notice of error before 

investigating; 


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41 12 CFR 1005.11(c)(1). Note that this 10-day 

period may be extended to 20 days for certain new 

accounts. 12 CFR 1005.11(c)(3)(i). 

42This time period may be extended to 90 days 

for certain transactions, such as transactions outside 

the U.S., point of sale transactions, or transactions 

that occurred within 30 days of the first deposit to 

the account. 12 CFR 1005.11(c)(3)(ii). 

43 12 CFR 1005.11(c)(2)(i). 

44 12 CFR 1005.11(c)(2)(i)(A). Note that even 

though a financial institution may request written 

confirmation within 10 days of receipt of an oral 

notice, it must begin its investigation promptly 

upon receipt of an oral notice. 

12 CFR 1005, supp. I, comment 11(b)(1). 

45 12 CFR 1005.11(c)(2)(ii). 

46 12 CFR 1005.11(c)(2)(iv). 

47 12 CFR 1005.11(d)(2)(i). 

48 12 CFR 1005.11(d)(2)(ii). 

49 12 CFR part 1005, supp. I, comment 11(d)(2)– 

1. 

50See also 12 CFR 1005.2(l) (defining ‘‘state’’). 

51While certain payment network rules may 

impose alternative timing requirements or 

limitations, network rules do not excuse 

institutions from complying with the applicable 

Regulation E timelines to complete the error 

investigation and make a determination. 12 CFR 

1005.11(c)(2) and (3). 

52 71 FR 1638, 1654 (Jan. 10, 2006). See also 

USAA Federal Savings Bank Consent Order, File 

No. 2019–BCFP–0001. 

• Requiring consumers to contact 

merchants about alleged unauthorized 

transactions before investigating; 

• Relying on incorrect dates to assess 

the timeliness of an EFT error notice; 

• Failing to provide an explanation or 

an accurate explanation of investigation 

results when determining no error or a 

different error occurred; and 

• Failing to include in the error 

investigation report a statement 

regarding a consumer’s right to obtain 

the documentation that an institution 

relied on in its error investigation. 

An effective compliance strategy for 

institutions includes evaluation of their 

practices, including through transaction 

testing, monitoring, and review of their 

policies and procedures. This will help 

ensure compliance with applicable 

Federal consumer financial laws and 

stop any practices that were previously 

identified as violations. Examples of 

other violations found by examiners are 

described below. 

2.4.2 Issues With Provisional Credits 

Under Regulation E, a financial 

institution generally must complete its 

investigation and determine whether an 

error occurred within 10 business days 

of receiving a notice of error.41 But an 

institution may take up to 45 days 42 to 

complete its investigation if it, among 

other things, provisionally credits the 

alleged error amount (including interest 

where applicable) to the consumer’s 

account within 10 business days of 

receiving the error notice.43 The 

institution need not issue a provisional 

credit if it requires, but does not receive, 

written confirmation of an oral notice of 

error within 10 business days.44 When 

institutions issue provisional credits, 

they must inform the consumer of the 

amount and date the credit was applied 

to the account within two business days 

after provisionally crediting the 

account.45 Within three business days of 

completing an error investigation, the 

financial institution must report the 

results to the consumer, including, if 

applicable, notice that a provisional 

credit has been made final.46

If an institution debits a provisional 

credit from a consumer’s account 

because it determines that no error 

occurred or that an error occurred in a 

manner or amount different from that 

described by the consumer, it must, 

among other things, notify consumers of 

the debiting.47 The notice must State the 

date and amount of the debit and that 

the financial institution will honor 

checks, drafts, or similar instruments 

payable to third parties and 

preauthorized EFTs from the 

consumer’s account for five business 

days after the notification.48 As an 

alternative to this notice, which is 

specified in the text of Regulation E, the 

associated Staff Commentary provides 

that a financial institution may notify 

the consumer that the consumer’s 

account will be debited five business 

days from the transmittal of the 

notification and specify the calendar 

date on which the debiting will occur.49

Examiners found that numerous 

institutions violated Regulation E’s 

provisional credit requirements, 

including as follows: 

• Failing to provide provisional 

credits, despite not completing error 

investigations within 10 business days 

of notice of an error; 

• Failing to provide provisional 

credits to consumers who timely 

provided required written confirmation 

of oral error notices; 

• Posting the provisional credit to the 

wrong account, by failing to ensure that 

the ownership of the credited account 

matched the account that should have 

received the credit; 

• Excluding interest from the 

provisional credit; 

• Using notification templates that 

either had a timeframe to disclose when 

a provisional credit would be applied 

instead of a specific date or lacked any 

date information; 

• Failing to provide notice that a 

provisional credit had been made final 

due to process weakness, including: (i) 

An unsuccessful attempt to combine the 

letter informing consumers of a 

provisional credit with the letter 

notifying them the credit would be final, 

and (ii) a process deficiency in which 

both the financial institution and the 

merchant of the disputed charge issued 

a simultaneous credit; and 

• Sending consumers notices that 

provisional credits would be reversed, 

but excluding either the exact date a 

credit was or would be debited or notice 

that it would honor checks, drafts, or 

similar instruments payable to third 

parties and preauthorized transfers from 

the customer’s account for five business 

days after the notification, or excluding 

both. 

The institutions took a variety of 

corrective actions to remedy these 

violations, including making 

improvements to compliance 

management systems and providing 

remediation to consumers. 

2.4.3 Failure To Timely Investigate 

Errors 

If a financial institution is unable to 

complete its investigation within 10 

business days, 12 CFR 1005.11(c)(2) 

provides that an institution may take up 

to 45 days from receipt of the notice of 

error to investigate and determine 

whether an error occurred provided it, 

among other things, provisionally 

credits the consumer’s account as 

discussed above. If the alleged error 

involves an EFT that was not initiated 

within a state, resulted from a point-ofsale debit card transaction, or occurred 

within 30 days after the first deposit to 

the account was made, the institution 

may take up to 90 days to investigate 

and determine whether an error 

occurred, provided it otherwise 

complied with the requirements of 12 

CFR 1005.11(c)(2).50

Examiners found that financial 

institutions violated Regulation E by 

failing to complete investigations and 

make a determination within 45 days 

from receipt of the notice of error and 

within 90 days from receipt of the 

notice of error for point-of-sale debit 

transactions, respectively, after 

providing provisional credit within 10 

business days of the error notice. In 

each instance, the financial institutions 

exceeded the applicable timelines. 

In response to examiners’ findings, 

the financial institutions updated their 

training to ensure that employees were 

properly trained on the applicable 

Regulation E timelines and modified 

certain policies and procedures.51

2.4.4 Failure To Conduct Reasonable 

Investigations 

All error investigations ‘‘must be 

reasonable.’’ 52 When it applies, 

Regulation E, 12 CFR 1005.11(c)(4), 

requires that a financial institution in 


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53 12 CFR 1005.11(c)(4). Section 1005.11(c)(4) 

applies when the conditions in § 1005.11(c)(4)(i) 

and (ii) are satisfied. 

54 12 CFR part 1005, supp. I, comment 11(c)(4)– 

5. 

55 12 CFR part 1005, supp. I, somment 11(c)–6. 

56 12 CFR 1005, et seq. 

57 12 CFR 1030, et seq. 

58 12 U.S.C. 4301, et seq. 

59 12 U.S.C. 5531, 5536. 

60 12 CFR 1005.17. 

61 12 CFR 1005.17(b)(1)(ii). 

62 12 CFR 1005.17(b)(iv). 

63 12 CFR 1005.13(b)(1). 

64 12 CFR 1005.17(d). 

65 12 CFR 1030.11(c). 

66See 12 CFR part 1030(6)(a)(3). 

investigating an error must conduct, at 

a minimum, a ‘‘review of its own 

records regarding [the] alleged error.’’ 53

This review must include at least ‘‘any 

relevant information within the 

institution’s own records.’’ 54

Examiners found that some financial 

institutions violated Regulation E by 

failing to conduct a reasonable 

investigation and instead denied claims 

solely because the consumers had 

previously conducted business with a 

merchant. One institution, upon seeing 

that a consumer was challenging a 

charge from a merchant with whom the 

consumer had prior transactions, closed 

error investigations without completing 

them, and instead instructed consumers 

to first direct the claim to the merchant 

that made the charge. 

In response to examiners’ findings, 

the financial institutions updated their 

training to ensure that employees were 

properly trained on the applicable 

Regulation E investigation requirements 

and enhanced certain policies and 

procedures and monitoring to ensure 

investigations are completed properly. 

In addition, the financial institutions 

identified and remediated all consumers 

whose Regulation E error claims were 

wrongly denied based upon pre-existing 

relationships with the merchant and 

whose error resolution claims were not 

investigated as required. 

2.4.5 Failure To Properly Remediate 

Errors 

When a financial institution 

determines an alleged error did occur, 

commentary to Regulation E highlights 

‘‘it must correct the error . . . including, 

where applicable, the crediting of 

interest and the refunding of any fees 

imposed by the institution.’’ 55

Examiners determined that some 

financial institutions failed to refund 

associated fees and credit interest when 

correcting an error. One such institution 

implemented automated processes, as 

well as policy updates and enhanced 

training to address the issue. At another 

institution, employees failed to provide 

proper credits and refunds although it 

was required by the institution’s 

procedures. This failure indicated a lack 

of proper training, which the institution 

was asked to enhance. Both institutions 

stated that they would or had 

remediated impacted consumers. 

For another institution, this violation 

occurred because the institution’s ACH 

teams reviewed issues on a transactionby-transaction basis, which did not 

allow it to evaluate the impact of the 

issue at the account or claim level. This 

institution reorganized its staff to 

evaluate consumer accounts on an 

individual or account level, conducted 

a lookback to remediate impacted 

consumers, and updated policies to 

ensure that fees were credited to the 

accounts. 

Similarly, an organizational issue 

caused the problem at another 

institution. This institution used 

multiple divisions to investigate and 

correct errors, depending on the type of 

error alleged. Differing policies and 

procedures between divisions created 

various levels of authority for error 

resolution. Because of these differences, 

the institution failed to refund the fees 

as is required by the Regulation E 

commentary, despite determining the 

alleged error occurred. The institution 

rectified this situation by reviewing and 

consolidating the role of error 

investigation into one division to ensure 

all Regulation E errors were consistently 

processed and committed to remediate 

harmed consumers. 

2.4.6 Overdraft Opt-In and Disclosure 

Violations 

The CFPB continues to examine 

financial institutions’ overdraft opt-in 

and disclosure practices for compliance 

with relevant statutes and regulations, 

including Regulation E,56 Regulation 

DD,57 which implements the Truth in 

Savings Act,58 and the Dodd-Frank Act’s 

prohibition on unfair, deceptive, or 

abusive acts or practices.59

Many institutions provide various 

overdraft products that charge fees for 

transactions that overdraw accounts. 

Regulation E prohibits financial 

institutions from charging overdraft fees 

on ATM and one-time debit card 

transactions unless consumers 

affirmatively opt in to overdraft 

service.60 Among other things, 

Regulation E requires that institutions 

provide consumers ‘‘a reasonable 

opportunity for the consumer to 

affirmatively consent, or opt in, to the 

service for ATM and one-time debit card 

transactions.’’ 61 Moreover, institutions 

must provide consumers ‘‘with 

confirmation of the consumer’s consent 

in writing, or if the consumer agrees, 

electronically, which includes a 

statement informing the consumer of the 

right to revoke such consent.’’ 62

Regulation E requires institutions to 

maintain evidence of compliance for a 

period of not less than two years from 

the date action is required to be taken 

or disclosures are required to be given.63

Examiners identified a number of 

violations in connection with these 

overdraft opt-in requirements, including 

the following: 

• Failing to obtain affirmative consent 

from consumers before charging them 

overdraft fees for ATM and one-time 

debit card transactions, due to coding 

errors, systems mergers, or inadequate 

phone-based opt-in procedures. These 

institutions provided remediation to 

consumers assessed these overdraft fees 

without their authorization and ceased 

charging overdraft fees to consumers 

who did not opt in. 

• Failing to advise consumers who 

opted-in to overdraft online of their 

right to revoke their opt-in to ATM and 

one-time debit overdraft services as part 

of the opt-in confirmation notice. 

Supervision issued a Matter Requiring 

Attention (MRA) regarding the need for 

a notice that included the right to 

revoke and also remediation for 

consumers impacted by the previous 

deficient notice. 

• Failing to retain evidence of having 

obtained affirmative consent from 

consumers to opt into overdraft services 

for ATM and one-time debit card 

transactions, including due to process 

deficiencies for in-branch opt-in and 

general document retention failures. 

The institutions were directed to rectify 

their procedures. 

• Failing to provide consumers 

overdraft opt-in notices that were 

substantially similar to the Model Form 

A–9 disclosure, in violation of 

Regulation E.64 Institutions corrected 

their notices. 

Supervision identified violations of 

Regulation DD requirements related to 

overdraft services as well, including: 

• Disclosing to consumers, through 

automated systems, available account 

balance amounts that included 

discretionary overdraft credit that the 

bank potentially could provide; 65 and 

• Failing to correctly disclose on 

periodic statements the amount of 

overdraft fees incurred by consumers 

during a statement cycle.66

The institutions implemented or 

proposed policy and procedure changes 

to address the violations. 


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67 15 U.S.C. 1691–1691f. 

68 12 CFR part 1002. 

69 12 U.S.C. 2801–2810. 

70 12 CFR part 1003. 

71 12 CFR 1003.4(a). 

72 80 FR 66128 (Oct. 28, 2015). 

73See the CFPB HMDA Summary of Reportable 

Data chart (2015), https://

files.consumerfinance.gov/f/201510_cfpb_hmdasummary-of-reportable-data.pdf. 

74LARs of 500 entries or fewer have a 

resubmission threshold of three errors. CFPB 

Examination Procedures, updated April 1, 2019, 

available at https://files.consumerfinance.gov/f/ 

documents/cfpb_supervision-and-examinationmanual_hmda-exam-procedures_2019-04.pdf. 

75For more information about CFPB HMDA LAR 

transaction testing and samples, refer to the CFPB 

HMDA Examination Procedures, updated April 1, 

2019, available at https://

files.consumerfinance.gov/f/documents/cfpb_

supervision-and-examination-manual_hmda-examprocedures_2019-04.pdf. 

2.5 Fair Lending 

The Bureau’s fair lending supervision 

program assesses compliance with the 

Equal Credit Opportunity Act (ECOA) 67

and its implementing regulation, 

Regulation B,68 as well as the Home 

Mortgage Disclosure Act (HMDA) 69 and 

its implementing regulation, Regulation 

C,70 at banks and nonbanks over which 

the Bureau has supervisory authority. 

Examiners found that supervised 

institutions engaged in violations of 

HMDA and Regulation C, and ECOA 

and Regulation B. 

2.5.1 HMDA Examination Findings— 

2018 & 2019 Data 

The Bureau continues to examine 

mortgage originators, including bank 

and nonbank financial institutions, for 

compliance with HMDA and its 

implementing regulation, Regulation C. 

Regulation C requires financial 

institutions to collect and report data 

regarding applications for covered loans 

that they receive, covered loans that 

they originate, and covered loans that 

they purchase each calendar year.71

Recent examinations identified HMDA 

violations due to inaccuracy of HMDA 

data submitted by financial institutions, 

including fields newly added to the 

HMDA loan application register (LAR) 

beginning in 2018. In October 2015, the 

CFPB issued a final rule (2015 HMDA 

Rule) that included changes to the types 

of institutions that are subject to 

Regulation C; the types of transactions 

subject to Regulation C; the specific 

information that covered institutions are 

required to collect, record, and report; 

and processes for reporting and 

disclosing data.72 For HMDA data 

collected on or after January 1, 2018, 

certain covered institutions were 

required to collect, record, and report 

data points newly added or modified by 

the 2015 HMDA Rule. 

Specifically, the 2015 HMDA Rule 

added new data points for Applicant or 

Borrower Age, Credit Score, Automated 

Underwriting System information, 

Unique Loan Identifier, Property Value, 

Application Channel, Points and Fees, 

Borrower-paid Origination Charges, 

Discount Points, Lender Credits, Loan 

Term, Prepayment Penalty, Nonamortizing Loan Features, Interest Rate, 

and Loan Originator Identifier as well as 

other data points. The 2015 HMDA Rule 

also modified several existing data 

points.73 Most of the additions and 

modifications to the HMDA LAR fields 

within the 2015 HMDA rule became 

effective January 1, 2018. Examinations 

evaluating data reported in 2018 and 

2019 were the first examinations in 

which the Bureau reviewed the 

accuracy of the data in HMDA LAR 

fields added by the 2015 HMDA Rule. 

The CFPB’s HMDA examinations 

include transaction testing of a sample 

of the institution’s HMDA LAR and 

review of its CMS as it relates to HMDA. 

Transaction testing consists of 

comparing a sample of the institution’s 

HMDA LAR to source documents from 

the loan files corresponding to each 

LAR entry (LAR line or row of the data) 

and assessing whether or not the LAR 

entry is accurate. When errors are 

identified, examiners evaluate the 

number of errors relative to the 

resubmission threshold, which is the 

data accuracy standard used in the 

CFPB’s examinations. Specifically, the 

HMDA interagency resubmission 

thresholds provide that in a LAR of 

more than 500 entries, when the total 

number of errors in any data field 

exceeds four, examiners should direct 

the institution to correct any such data 

field in the full HMDA LAR and 

resubmit its HMDA LARs with the 

corrected field(s).74 These resubmission 

thresholds are included in the CFPB’s 

HMDA examination procedures.75

2.5.2 2018 & 2019 HMDA LAR Errors 

Examiners identified widespread 

errors within 2018 HMDA LARs of 

several covered financial institutions. 

To date, examiners have not identified 

widespread LAR errors within 

institutions’ 2019 LARs. In several 

examinations, examiners identified 

errors that exceed the HMDA 

resubmission thresholds. In general, 

examiners identified more errors in data 

fields collected beginning in 2018 

pursuant to the 2015 HMDA rule than 

for other fields. For example, the fields 

with the highest number of identified 

errors across several institutions were 

the newly required ‘‘Initially Payable to 

Your Institution’’ field and the ‘‘Debt-toIncome Ratio’’ field. 

2.5.3 Root Causes of HMDA Data 

Errors 

In several examinations in which 

examiners identified numerous errors, 

the root causes of the HMDA violations 

were deficiencies in the institutions’ 

CMS. The CMS deficiencies included 

the institutions’ board and management 

oversight, policies and procedures, 

training, monitoring and audit, and the 

institutions’ service provider oversight. 

Many of the widespread or systemic 

errors related to problems within the 

institutions’ data mapping—the data 

transfers from operations-based systems, 

such as loan origination systems, to data 

storage systems that populate the 

HMDA LARs. For example: 

• Examiners determined that 

numerous errors within the Credit 

Scoring model fields were caused by 

data transfer deficiencies in which 

institutions extracted data from credit 

scoring models then transferred them to 

systems that reported inaccurate codes 

and descriptions of the credit scores. 

• Examiners identified errors within 

the Rate Spread field and observed that 

these errors occurred due to data 

mapping or data transfer deficiencies. 

Institutions allowed erroneous software 

updates within their loan processing 

systems to result in inaccurate Rate 

Spread values reported on their HMDA 

LARs. Examiners determined that 

service provider oversight deficiencies 

resulted in institutions’ failure to correct 

the erroneous data transfers. 

• Examiners identified inaccurate 

values for the debt-to-income ratio. The 

institutions acknowledged the errors 

and stated the fields reported 

incorrectly were the result of a change 

made to the programming of their loan 

origination system. 

Many of the widespread or systemic 

errors were caused by misinterpretation 

of Regulation C requirements or the 

institution’s specific policy. For 

example: 

• Examiners determined that 

employees at one institution 

misinterpreted the institution’s policies 

and procedures for calculating the ages 

of applicants and co-applicants. 

Examiners determined that these errors 

were caused by deficiencies in the 

institution’s monitoring and audit 

function. 

• Examiners determined that an 

institution’s senior management 

misinterpreted HMDA and Regulation 

C, concluding erroneously that the 

Origination Charges, Discount Points, 

and/or Lender Credits fields should be 

reported as ‘‘Not applicable.’’ For 


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76On December 21, 2017, the Bureau issued a 

Statement with respect to HMDA compliance 

announcing among other things that the Bureau 

does not intend to assess penalties for errors in data 

collected in 2018 and that the Bureau does not 

intend to require data resubmission unless errors 

are material. See Consumer Fin. Prot. Bureau, CFPB 

Issues Public Statement On Home Mortgage 

Disclosure Act Compliance (Dec. 21, 2017), 

available at https://www.consumerfinance.gov/ 

about-us/newsroom/cfpb-issues-public-statementhome-mortgage-disclosure-act-compliance/. During 

examinations of 2018 data in which CFPB 

Supervision required financial institutions to 

resubmit data, Supervision concluded that the 

errors identified were material. 

77 12 CFR 1002.4(b). 

78 12 CFR part 1002, supp. I, para. 4(b)–1. 

79Examination teams defined majority-minority 

areas as >50% minority and high-minority areas as 

>80% minority. 

80 12 CFR 1026.36(d)(1)(i). 

81 12 CFR part 1026, supp. I, comment 36(d)(1)– 

1.i. 

82 2013 Loan Originator Compensation Rule, 78 

FR 11279, 11326 (Feb. 15, 2013). The Bureau noted 

that the meaning of loan ‘‘product’’ is ‘‘not firmly 

established and varies with the person using the 

term, but it generally refers to various combinations 

of features such as the type of interest rate and the 

form of amortization.’’ Id. at 11284. 

83 Id. at 11326–27, note 82. The Bureau further 

noted in the preamble that permitting different 

compensation based on different product types 

would create ‘‘precisely the type of risk of steering’’ 

that the statutory provisions implemented through 

the 2013 Loan Originator Final Rule sought to 

avoid. Id. at 11328. The Bureau also declined to 

exclude State housing finance authority loans from 

the scope of the rule. Id. at 11332–33. 

example, examiners observed 

Origination Charges, displayed as 

‘‘zero’’ within source documentation, 

inaccurately reported as ‘‘Not 

applicable.’’ The Origination Charges 

field should be entered, in dollars for 

the total of all itemized amounts that are 

designated borrower-paid at or before 

closing. If the total is zero, enter 0. Enter 

‘‘NA’’ if the requirement to report 

origination charges does not apply to 

the covered loan or application that the 

institution is reporting. 

2.5.4 HMDA Supervisory Actions 

In response to widespread HMDA 

LAR inaccuracies identified during 

examinations, institutions will review, 

correct, and resubmit their HMDA 

LAR.76 Some institutions have already 

resubmitted their HMDA LARs. 

In addition, institutions will enhance 

monitoring practices to ensure they are 

completed timely and appropriately 

identify and measure HMDA risk. Some 

institutions will develop and implement 

an effective HMDA monitoring program 

that prevents, detects, and corrects 

violations of HMDA and Regulation C, 

and ensures appropriate corrective 

actions are taken. 

Some institutions will make 

improvements to CMS components that 

were the cause of errors, including 

through (1) implementation of policies, 

procedures and/or a plan that ensures 

that fields that had errors are reported 

accurately; (2) improvements to board 

and management oversight to ensure 

that the board and management 

promptly responds to CMS deficiencies 

and violations of Regulation C; and (3) 

improvements to their HMDA training 

program regarding collecting and 

recording data for the HMDA LAR, 

including ensuring it is specifically 

tailored to staff with responsibilities 

relating to HMDA. 

2.5.5 Redlining 

Regulation B prohibits 

discouragement of ‘‘applicants or 

prospective applicants’’. Specifically, it 

states: ‘‘A creditor shall not make any 

oral or written statement, in advertising 

or otherwise, to applicants or 

prospective applicants that would 

discourage on a prohibited basis a 

reasonable person from making or 

pursuing an application.’’ 77 The Official 

Interpretations of Regulation B also 

explain that this prohibition ‘‘covers 

acts or practices directed at prospective 

applicants that could discourage a 

reasonable person, on a prohibited 

basis, from applying for credit.’’ 78

In the course of conducting 

supervisory activity, examiners 

observed that a lender violated ECOA 

and Regulation B by engaging in acts or 

practices directed at prospective 

applicants that would have discouraged 

reasonable people in minority 

neighborhoods in Metropolitan 

Statistical Areas (MSAs) from applying 

for credit. 

Initial statistical analysis of the 

HMDA data and U.S. census data 

showed that the lender received 

significantly fewer applications from 

majority-minority and high-minority 

neighborhoods relative to other peer 

lenders in the MSA, which resulted in 

the prioritization of the institution for a 

redlining examination. The examination 

teams’ subsequent, in-depth analyses, 

including general and refined peer 

analyses, confirmed these differences 

relative to its peer lenders in the MSA.79

Examiners identified evidence of 

communications directed at prospective 

applicants that would discourage 

reasonable persons on a prohibited basis 

from applying to the lender for a 

mortgage loan. First, the lender 

conducted a number of direct mail 

marketing campaigns that featured 

models, all of whom appeared to be 

non-Hispanic white. Second, the lender 

included headshots of its mortgage 

professionals in its open house 

marketing materials, and in almost all of 

these materials, the headshots showed 

only professionals who appeared to be 

non-Hispanic white. Third, the lender’s 

office locations were nearly all 

concentrated in majority non-Hispanic 

white areas, as confirmed by the 

lender’s website communicating where 

the offices are located. Each of these acts 

or practices is a form of communication 

directed at prospective applicants. 

Also, the lender’s direct marketing 

campaign and Multiple Listing Service 

(MLS) advertising was focused on 

majority-white areas in the MSA, which 

provided additional evidence of its 

intent to discourage on a prohibited 

basis. In addition, the examination team 

determined that the lender employed 

mostly non-Hispanic white mortgage 

loan officers and identified emails 

among mortgage loan officers containing 

racist and derogatory content. The 

lender plans to undertake remedial and 

corrective actions regarding this 

violation, which are under review by 

the Bureau. 

2.6 Mortgage Origination 

Supervision assessed the mortgage 

origination operations of several 

supervised entities for compliance with 

applicable Federal consumer financial 

laws. Examinations of these entities 

identified violations of Regulation Z and 

deceptive acts or practices prohibited by 

the CFPA. 

2.6.1 Compensating Loan Originators 

Differently Based on Product Type 

Regulation Z generally prohibits 

compensating mortgage loan originators 

in an amount that is based on the terms 

of a transaction.80 Compensation is 

based on the term of a transaction if the 

objective facts and circumstances 

indicate that the compensation would 

have been different if a transaction term 

had been different.81 In the preamble to 

the Bureau’s 2013 Loan Originator Final 

Rule, the Bureau responded to questions 

from commenters about whether it was 

permissible to compensate differently 

based on product types, such as credit 

extended pursuant to government 

programs for low-to moderate-income 

borrowers.82 As part of its response to 

these questions, the Bureau explained 

that it is not permissible to differentiate 

compensation based on credit product 

type, since products are simply a bundle 

of particular terms.83

Examiners found that lenders’ 

compensation policies specified lower 

compensation for originating a bond 

loan subject to requirements set forth by 

a State Housing Finance Agency (HFA), 

and that the lenders followed these 

policies. Examiners also found that 


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84 12 CFR 1026.37(f)(2); 12 CFR part 1026, supp. 

I, comment 37(f)(2)–4. 85 12 CFR 1026.37(g)(4); 12 CFR part 1026, supp. 

I, comment 37(g)(4)–2. 86 12 CFR 1026.36(h)(2). 

87Supervisory Highlights, Summer 2015, at 15. 

88Supervisory Highlights, Summer 2017, at 22. 

89This examination work was completed after the 

review period for this report. 

90 15 U.S.C. 602(dd)(5), (w). 

91 12 CFR 1024.41(f)(2)(i). 

92 12 CFR 1024.38(a), (b). 

93 12 CFR 1024.17(c)(7). 

lenders compensated loan originators by 

paying them more for originating 

construction loans than for other types 

of loans. Examiners determined that by 

compensating loan originators 

differently based on whether the loan 

was an HFA loan or construction loan, 

the lenders compensated loan 

originators based on the terms of the 

transaction because the compensation 

would have been different if the terms 

of the transaction had been different. As 

a result, each lender involved agreed to 

no longer compensate loan originators 

differently based on product type. 

2.6.2 Disclosure of Simultaneously 

Purchased Lender and Owner Title 

Insurance 

Where there is simultaneous purchase 

of lender and owner title insurance 

policies, Regulation Z requires creditors 

to disclose the lender’s title insurance 

based on the amount of the premium, 

without any discount that might be 

available for the simultaneous purchase 

of an owner’s title insurance policy.84

Creditors are required to disclose the 

premium for the owner’s policy 

showing the impact of the simultaneous 

purchase discount.85 The intent of this 

rule is to provide consumers with 

information on the incremental 

additional cost associated with 

obtaining an owner’s title insurance 

policy, and the cost they would be 

required to pay for the lender’s policy 

if they did not purchase an owner’s 

policy. Examiners found that some 

creditors violated Regulation Z by 

disclosing the lender’s title insurance 

premium at the discounted rate and the 

owner’s title insurance at the full 

premium on the Loan Estimate. 

Supervision requested that the creditors 

revise their policies and procedures to 

ensure correct disclosure of title 

insurance premiums where there is a 

simultaneous issuance rate for lender’s 

and owner’s title policies. 

2.6.3 Deceptive Waivers of Borrowers’ 

Rights in Security Deed Riders and Loan 

Security Agreements 

Regulation Z states that a ‘‘contract or 

other agreement relating to a consumer 

credit transaction secured by a dwelling 

. . . may not be applied or interpreted 

to bar a consumer from bringing a claim 

in court pursuant to any provision of 

law for damages or other relief in 

connection with any alleged violation of 

Federal law.’’ 86 In light of this 

provision, examiners previously 

concluded that certain waiver 

provisions are deceptive where 

reasonable consumers could construe 

the waivers to bar them from bringing 

Federal claims in court related to their 

mortgages. For example, examiners 

previously identified waiver provisions 

in home equity installment loan 

agreements that provided that 

consumers who signed the agreements 

waived all other notices or demands in 

connection with the delivery, 

acceptance, performance, default or 

enforcement of the agreement and 

concluded that those provisions 

violated the CFPA’s prohibition on 

deceptive acts or practices.87 Similarly, 

in the mortgage servicing context, 

examiners previously identified broad 

waiver of rights clauses in forbearance, 

loan modification, and other loss 

mitigation options and concluded that 

they violated the CFPA’s prohibition 

against unfair or deceptive acts or 

practices.88

Examiners identified a waiver 

provision in a rider to a security deed 

that is in use in one state.89 The waiver 

provided that borrowers who signed the 

agreement waived all of their rights to 

notice or to judicial hearing before the 

lender exercises its right to 

nonjudicially foreclose on the property. 

Examiners concluded that the use of 

this provision by mortgage lenders 

violated the CFPA’s prohibition on 

deceptive acts or practices. Regulation 

X, 12 CFR 1024.41, implementing the 

Real Estate Settlement Procedures Act 

(RESPA), requires mortgage servicers to 

provide borrowers with certain notices 

in the loss mitigation context and 

borrowers may bring suit to enforce 

those provisions. A reasonable 

consumer could understand the 

provision to waive the consumer’s right 

to sue over a loss mitigation notice 

violation in the nonjudicial foreclosure 

context. This misrepresentation is 

material because it could dissuade 

consumers from consulting a lawyer or 

otherwise bringing Federal claims in 

court related to the transaction. Thus, 

examiners concluded that the waiver 

provision was deceptive. In response to 

the examination findings, the entities 

committed to discontinuing use of the 

form containing the waiver. 

Examiners also found that entities 

required borrowers in another State to 

agree to a waiver, in the event of default, 

of any equity or right of redemption in 

the loan security agreement for 

cooperative units. Specifically, the 

waiver stated that in the event of 

default, lenders may sell the security at 

public or private sale and thereafter 

hold the security free from any claim or 

right whatsoever of the borrower, who 

waives all rights of redemption, stay or 

appraisal which the borrower has or 

may have under any rule or statute. 

Examiners determined that the waiver 

language would likely mislead a 

consumer into believing that by signing 

the agreement they waived their right to 

bring any claim in court, including 

Federal claims.90 This interpretation 

could appear reasonable to a consumer. 

The misrepresentation was material 

because it was likely to affect whether 

a consumer would choose to retain 

counsel or pursue claims against the 

entity in the future. As a result, the 

entities implemented an agreement 

resolving the issue and committed to 

providing clarification to all affected 

borrowers. 

2.7 Mortgage Servicing 

Bureau examinations continue to 

review for violations of mortgage 

servicing requirements. Examiners 

determined that servicers violated 

Regulation X by making the first notice 

or filing for foreclosure when it was 

prohibited.91 Examiners also 

determined that servicers engaged in a 

deceptive act or practice when they 

represented to borrowers that they 

would not initiate a foreclosure action 

until a specified date, but nevertheless 

initiated foreclosures prior to that date. 

Examiners also found that servicers 

failed to maintain policies and 

procedures, as required by Regulation X, 

reasonably designed to achieve specific 

objectives described in Regulation X.92

Additionally, examiners found that 

servicers violated Regulation X by 

conducting an annual escrow analysis 

that assumed that private mortgage 

insurance (PMI) payments would 

continue for the entire escrow analysis 

period, despite the servicers’ knowledge 

that PMI would be automatically 

terminated before the end of the escrow 

analysis period.93

2.7.1 Dual Tracking Violations 

Regulation X generally prohibits a 

servicer from making the first notice or 

filing required for foreclosure if the 

consumer submits a complete loss 

mitigation application unless the 

servicer has completed the review of the 

application, considered any appeals, the 

borrower rejects all loss mitigation 


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94 12 CFR 1024.41(f)(2)(i). 

95 12 CFR 1024.41(f)(2)(i). 

96 12 CFR 1024.38(a), (b). 

97 12 CFR 1024.38(b)(3)(iii). 

98 12 CFR 1024.41(i). 

99 12 CFR 1024.17(c)(3). 

100 12 CFR 1024.17(c)(7). 

options offered by the servicer, or the 

borrower fails to perform under an 

agreement on a loss mitigation option. If 

a consumer submits all of the 

documents requested by the servicer in 

response to the notice in 12 CFR 

1024.41(b)(2)(i)(B), then the application 

is ‘‘facially complete’’ and the servicer 

must treat the application as complete 

for the purposes of the foreclosure 

referral protections of 12 CFR 

1024.41(f)(2) until the borrower is given 

a reasonable opportunity to complete 

the application. 

Examiners found that servicers 

violated Regulation X by making the 

first filing for foreclosure after the loan 

application was facially complete but 

before meeting the requirements of 12 

CFR 1024.41(f)(2). The servicers 

received all the information requested 

in the 12 CFR 1024.41(b)(2)(i)(B) notice 

and therefore the application was 

facially complete. However, the 

servicers did not place a foreclosure 

hold on the account when the 

documents were received. Instead, the 

servicers waited until they had 

completed internal analysis that the 

application was facially complete, 

which took more than a day, during 

which time a foreclosure filing occurred 

in spite of the facially complete 

application having been received. 

As a result of this finding, servicers 

remediated foreclosure fees that were 

charged to consumers who had 

submitted facially complete 

applications prior to the first foreclosure 

filing. They also enhanced their 

procedures, employee training, and 

monitoring controls. 

Regulation X also prohibits a servicer 

from making the first notice or filing for 

foreclosure before making a decision on 

a borrower’s timely appeal of a denied 

loss mitigation application.94

Institutions violated Regulation X by 

making the first notice or filing for 

foreclosure before they had evaluated 

borrowers’ appeals. The servicers 

denied the borrowers’ loss mitigation 

applications and provided the 

borrowers with information about 

appealing the determination as required 

under Regulation X. The borrowers 

submitted the appeal within the 14-day 

period under 12 CFR 1024.41(h)(2). 

Prior to making a determination 

regarding the appeal, the servicers made 

a first notice or filing for foreclosure, 

violating Regulation X.95 In response to 

this finding, servicers enhanced policies 

and procedures, training, and 

monitoring controls. 

Regulation X requires servicers to 

maintain policies and procedures 

reasonably designed to achieve specific 

objectives described in the regulation.96

It provides that servicers’ policies and 

procedures shall be reasonably designed 

to facilitate the sharing of accurate and 

current information regarding the status 

of any evaluation of a borrower’s loss 

mitigation application and the status of 

any foreclosure proceeding among 

appropriate servicer personnel, 

including service provider personnel 

responsible for handling foreclosure 

proceedings.97

Some servicers had policies and 

procedures to notify foreclosure counsel 

to stop all legal fillings only after the 

servicer had sent borrowers the notice 

acknowledging receipt of a complete 

loss mitigation application, which may 

be sent to a consumer up to five days 

after receipt of their application. This 

represents a failure to facilitate the 

sharing with its service providers of 

accurate and current information 

regarding the status of borrowers’ loss 

mitigation applications. Because the 

servicers did not inform foreclosure 

counsel that a complete loss mitigation 

application had been submitted until it 

sent the loss mitigation 

acknowledgement notice, they failed to 

maintain policies and procedures 

reasonably designed to achieve the 

objective of 12 CFR 1024.38(b)(3)(iii). In 

response to these findings, servicers 

updated their policies and procedures. 

2.7.2 Misrepresentations Regarding 

Foreclosure Timelines 

Regulation X’s requirements related to 

loss mitigation applications do not 

apply to consumers submitting 

additional loss mitigation applications 

under certain circumstances. 

Specifically, they do not apply where a 

servicer has previously complied with 

the regulation’s loss mitigation 

requirements for a complete loss 

mitigation application and the borrower 

has been delinquent at all times since 

submitting the prior complete 

application.98

Some servicers failed to adopt 

appropriate policies and procedures for 

responding accurately to such repeat 

loss mitigation applications. Examiners 

identified a deceptive practice when 

servicers represented to borrowers that 

they would not initiate a foreclosure 

action until a specified date, but 

nevertheless initiated a foreclosure prior 

to that date. These servicers maintained 

a policy of using model 

communications for all borrowers that 

included language reflecting Regulation 

X protections for borrowers submitting 

loss mitigation applications regardless 

of whether Regulation X protections 

actually applied to those borrowers. 

Examiners identified loss mitigation 

files where the servicers specifically 

indicated in letters that they would not 

initiate a foreclosure action until a 

specific date. Examiners noted that the 

date was consistent with the timeline 

that Regulation X would require if the 

application were protected by those 

provisions. Nevertheless, the servicers 

did initiate foreclosure actions prior to 

that date. 

The inaccurate representations 

regarding the day foreclosure action 

would be initiated were likely to 

mislead borrowers into believing that 

they had more time until foreclosure 

than they actually did. It was reasonable 

for consumers to believe these 

representations since the information 

was provided on multiple loss 

mitigation related disclosures sent in 

response to the application. The 

representations were material because 

borrowers plan how they will obtain 

and when they will send necessary 

documents, and what actions they will 

take regarding their delinquent 

mortgages, based on the information 

provided—including the timeline for 

foreclosure. In response to these 

findings, servicers updated the 

information contained in letters sent to 

consumers. 

2.7.3 Failure To Consider PMI 

Termination Date During Annual 

Escrow Analysis 

Regulation X requires servicers to 

conduct an annual escrow analysis, in 

which they estimate the disbursement 

amounts of escrow account items.99 If 

the servicer ‘‘knows the charge’’ for an 

item ‘‘in the next computation year,’’ 

then it ‘‘shall use that amount’’ in its 

estimate.100 Servicers violated the 

requirements of 12 CFR 1024.17(c)(7) by 

including in the annual escrow analysis 

a full year of PMI disbursements, 

despite knowing that PMI would be 

charged for only part of the year. 

PMI, when required, is automatically 

terminated when the principal balance 

of the mortgage loan reaches 78 percent 

of the original value of the property 

based on the amortization schedule, as 

long as the borrower is current. 

Examiners found that one or more 

servicers’ systems maintain all relevant 

information to determine the 

termination date. Therefore, these 


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101 12 U.S.C. 5531, 5536(a)(1)(B). 

102 12 U.S.C. 5514(a)(1)(D). 

103 12 U.S.C. 5531 and 5536(a)(1)(B). 

servicers ‘‘know’’ that the charges for 

PMI will not last a full twelve months 

and will terminate before the end of the 

escrow year. Because the servicers know 

the charges for PMI will terminate for 

certain mortgages, including PMI 

charges after the termination date in the 

annual escrow analysis violates 12 CFR 

1024.17(c)(7). In response to these 

findings, the servicers began 

considering the PMI termination 

information in their systems while 

conducting the annual escrow analysis. 

2.8 Payday Lending 

The Bureau’s Supervision program 

covers entities that offer or provide 

payday loans. Examinations of these 

lenders identified deceptive acts or 

practices. 

2.8.1 Misrepresentations Regarding an 

Intent To Sue 

Examiners found that lenders engaged 

in deceptive acts or practices in 

violation of the CFPA when they sent 

delinquent borrowers collection letters 

stating an ‘‘intent to sue’’ if the 

consumer did not pay the loan.101

Examiners found the representations 

misled or were likely to mislead 

consumers, and that consumers’ 

interpretations were reasonable. A 

reasonable borrower could understand 

the letters to mean that the lender had 

decided it would sue if a borrower did 

not make payments as required by the 

letter. In fact, the lenders had not 

decided prior to sending the letters that 

they would sue if borrowers did not 

pay, and in most cases did not sue 

borrowers who did not pay. The 

representations were material because 

they could induce delinquent borrowers 

to change their conduct regarding their 

loans. For example, consumers may 

have made payments they otherwise 

would not have, in order to avoid the 

possibility of suit. In response to 

examination findings, the entities 

ceased issuing letters stating an intent to 

sue where such a determination had not 

already been made, and enhanced 

collections communication-related 

policies and procedures, training, and 

monitoring. 

2.8.2 Misrepresentations That No 

Credit Check Will Be Conducted 

Examiners observed that lenders 

engaged in a deceptive act or practice in 

violation of the CFPA when they falsely 

represented on storefronts and in photos 

on proprietary websites that they would 

not check a consumer’s credit history. In 

fact, the lenders used consumer reports 

from at least one consumer reporting 

agency in determining whether to 

extend credit. It was reasonable for a 

consumer to interpret the 

representations as meaning that the 

lenders would not check a consumer’s 

credit history when deciding whether to 

extend credit, and the representations 

were material because they were likely 

to affect consumers’ conduct with 

respect to applying for loans. 

Prospective customers may have had 

concerns about their credit histories and 

ability to obtain credit, and 

consequently made a different choice. 

Moreover, storefront advertising claims 

were express and presumed material. In 

response to these findings, the lenders 

ceased making misleading 

representations on signage at branch 

locations and websites, and 

implemented enhanced advertising 

oversight. 

2.8.3 Deceptive Presentation of 

Repayment Options to Borrowers 

Contractually Eligible for No-Cost 

Repayment Plans 

When consumers indicated an 

inability to repay their payday loans, 

lenders engaged in a deceptive act or 

practice by presenting payment options 

to consumers in a manner that misled or 

was likely to mislead them. Examiners 

found that, as a result of the institutions’ 

process of presenting fee-based 

refinance options to struggling 

borrowers while withholding 

information about contractually 

available no-cost repayment plan 

options, many consumers entered into 

fee-based refinances despite being 

eligible for a no-cost repayment option. 

The presentation of payment options 

misled, or was likely to mislead, 

consumers into believing that there was 

not a no-cost installment repayment 

option despite the loan agreements 

providing for one. Consumers may have 

also been misled into believing that a 

no-cost option was only available if the 

consumers first rejected or were found 

ineligible for other options, such as a 

fee-based refinance. A consumer’s 

misunderstanding of their repayment 

options would be reasonable in light of 

the fact that the consumers who elected 

these other options were not told about 

the no-cost repayment plan option by 

the institution at the time that the 

consumers expressed difficulty repaying 

their loans. The institutions’ misleading 

practice was material because it caused 

consumers to incur fees, such as for 

refinances, that could have been 

avoided had they been aware of their 

contractual right to a no-cost repayment 

option. 

2.9 Private Education Loan 

Origination 

The Bureau has supervisory authority 

over entities that offer or provide private 

education loans.102 The Bureau 

examines private education loan 

origination activities for compliance 

with applicable Federal consumer 

financial laws, including assessing 

whether entities have engaged in any 

unfair, deceptive, or abusive acts or 

practices prohibited by the CFPA. 

Examinations of these entities identified 

at least one deceptive act or practice. 

2.9.1 Deceptive Marketing Regarding 

Private Education Loan Rates 

Examiners found that entities engaged 

in a deceptive act or practice 103 by (1) 

advertising rates ‘‘as low as’’ X%, (2) 

disclosing certain conditions to obtain 

that rate (e.g., the borrower must make 

automatic payments and the rate was 

available only for applications filed by 

a date certain), and (3) omitting that a 

borrower’s rate would depend on their 

creditworthiness. Examiners determined 

that the net impression of the marketing 

materials misled or was likely to 

mislead consumers to believe the ‘‘as 

low as’’ rate was available regardless of 

creditworthiness. The consumers’ 

interpretation of such representations 

was reasonable under the circumstances 

and the entities’ misleading 

representations were material to 

consumers’ decisions to apply for a 

private education loan because it could 

impact the consumer’s decision to apply 

for or take the loan. As a result, the 

entities have removed the phrase ‘‘as 

low as’’ from its marketing materials 

and, rather, advertises the entire range 

of rates (e.g., ‘‘X.XX%–YY.YY%’’). Also, 

each entity involved now discloses that 

the lowest rates are only available for 

the most creditworthy applicants, in 

addition to other disclosures. 

2.10 Student Loan Servicing 

The Bureau continues to examine 

student loan servicing activities, 

primarily to assess whether entities 

have engaged in any unfair, deceptive or 

abusive acts or practices prohibited by 

the CFPA. Examiners identified three 

types of misrepresentations servicers 

made regarding consumer eligibility for 

the Public Service Loan Forgiveness 

(PSLF) program. Examiners also 

identified two unfair acts or practices 

related to failure to reverse negative 

consequences of automatic natural 

disaster forbearances and an unfair act 

or practice related to failing to honor 

consumer payment allocation 


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104Supervisory Highlights, Issue 21, Winter 2020. 

instructions. Additionally, examiners 

continued to find that servicers engaged 

in unfair acts or practices related to 

providing inaccurate monthly payment 

amounts to consumers after a loan 

transfer, as previously discussed in 

Supervisory Highlights.104

2.10.1 Public Service Loan Forgiveness 

PSLF may provide significant relief 

for consumers that work at 501(c)(3) 

nonprofits; government organizations; 

or other types of non-profit 

organizations that provide certain types 

of qualifying public services. Under the 

program, consumers that make 120 

qualifying payments on their Direct 

Loans while working for an eligible 

employer and repaying under an eligible 

repayment plan may have the balance of 

their loans forgiven. There is significant 

confusion about eligibility for PSLF, 

which is further complicated by the 

relative complexity of student loan 

types and terms. Consequently, 

examiners observed borrowers with 

Federal Family Education Loan Program 

(FFELP) loans requesting information 

from servicers about their eligibility for 

PSLF or inquiring about terms of the 

program. 

While FFELP loans are not initially 

eligible for PSLF, FFELP borrowers can 

consolidate into a Direct Consolidation 

Loan, which is eligible. Once 

consolidated, the consumer can start 

making eligible payments toward the 

120 needed for forgiveness. Direct 

Consolidation Loan borrowers are also 

eligible for other benefits like improved 

income-driven repayment options, 

while their FFELP loan counterparts are 

not. 

Examiners observed that servicers 

regularly provide FFELP borrowers 

information about PSLF. Examiners 

found that servicers regularly provided 

inaccurate information about eligibility 

for PSLF or Direct Consolidation Loans, 

resulting in deceptive acts or practices 

described below. 

2.10.2 Misrepresenting the Effect of 

Employer Certification Forms 

In examinations of student loan 

servicers, examiners identified a 

deceptive act or practice where servicer 

employees represented to FFELP loan 

borrowers that they could submit their 

employer certification forms (ECF) to 

receive a determination on whether 

their employers are eligible employers 

for PSLF. Yet under PSLF program 

guidelines, FFELP borrowers who 

submit an ECF prior to consolidation 

into a Direct Loan will be rejected, 

without any determination about 

employer eligibility. 

The servicers’ representations are 

likely to mislead borrowers into 

believing that they should submit an 

ECF prior to consolidation to receive 

confirmation that their employers are 

eligible. Consumers’ interpretation was 

reasonable under the circumstances and 

they were likely to be misled by the 

servicers’ representations, given the 

specificity of agents’ statements and the 

fact that agents routinely provided 

information about the PSLF program. 

FFELP borrowers were likely interested 

in entering the PSLF program as soon as 

possible, so that they could begin 

making the 120 payments required for 

forgiveness. The agents’ information 

was material because it was likely to 

affect FFELP borrowers’ conduct in 

taking the steps necessary to enter 

PSLF—most notably, consolidating their 

loans—and could delay these borrowers’ 

entry into the program by the time it 

takes to go through the ECF process. 

2.10.3 Misrepresenting Eligibility of 

FFELP Loans for PSLF 

Examiners found that servicers 

engaged in a deceptive act or practice by 

advising borrowers with FFELP loans 

that the loans could not become eligible 

for PSLF. 

Consumers with FFELP loans can 

consolidate their loans into a Direct 

Consolidation Loan and become eligible 

for PSLF. Examiners found that during 

calls servicers represented to consumers 

with FFELP loans that they had no 

potential course of action to become 

eligible for PSLF. This representation 

was likely to mislead consumers 

because, in fact, their loans could 

become eligible through consolidation. 

Consumers’ interpretation was 

reasonable under the circumstances 

because they reasonably believed that 

they had made their interest in 

eligibility for PSLF clear, and 

reasonably interpreted the servicers’ 

representations to mean that they could 

not take steps to qualify for PSLF. The 

representations were material because 

consumers called to inquire about loan 

forgiveness and if they had received 

accurate information may have taken 

steps to convert their FFELP loans to 

Direct Loans. 

2.10.4 Misrepresenting Employer 

Types Eligible for PSLF 

Examiners found that servicers risked 

engaging in a deceptive act or practice 

by informing borrowers interested in the 

PSLF program that they are only eligible 

if their employer is a nonprofit. The 

PSLF program provides loan forgiveness 

for eligible Federal student loans after 

ten years of payments by consumers 

who meet certain requirements, 

including that they work for a qualifying 

employer. Qualifying employers include 

local, State, Federal or tribal 

government entities; 501(c)(3) 

nonprofits; and or other types of nonprofit organizations that provide certain 

types of qualifying public services. 

Servicers stated in calls that consumers 

could be eligible for PSLF if they 

worked for nonprofits but did not 

mention that government employees 

and other types of employees are also 

eligible. This statement created the net 

impression that only employees of 

nonprofits were eligible. This was likely 

to mislead consumers, because other 

employment types are also eligible. This 

was a reasonable interpretation under 

the circumstances because servicers 

routinely provide consumers with 

information about eligibility for various 

programs. Finally, the representation 

was material to eligible consumers’ 

decision regarding whether to pursue 

PSLF. As a result of examiner findings, 

the servicers implemented a new 

training program for agents. 

2.10.5 Failure To Reverse the 

Consequences of Automatic Natural 

Disaster Forbearances 

Examiners identified unfair practices 

related to enrollment in natural disaster 

forbearances at entities servicing private 

student loans. Generally, student loan 

borrowers become eligible for a natural 

disaster forbearance when they, or their 

cosigners, reside in a zip code impacted 

by a declared natural disaster. In most 

situations this forbearance is opt-in, 

allowing consumers to contact their 

servicer and request the payment relief. 

However, at some servicers, examiners 

identified that certain populations of 

loans were automatically enrolled in the 

forbearance without a specific request 

from the consumer—even if they were 

otherwise current on their loans. Within 

this subset of consumers whose 

accounts were automatically placed into 

a natural disaster forbearance, 

examiners identified two unfair 

practices. 

First, examiners noted that despite the 

natural disaster declaration, some 

consumers did not want to be enrolled 

in the forbearance and requested to 

return to repayment. Often consumers 

identified negative consequences of 

forbearance and complained to their 

servicer about enrollment. For example, 

forbearance resulted in certain 

consumers losing payment incentives 

such as interest rate reductions for 

making on-time payments. It also 

resulted in consumers accruing unpaid 

interest during the period. And 


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105The Bureau has previously discussed payment 

allocation practices in Supervisory Highlights, Issue 

9, Fall 2015 and Issue 10, Winter 2016. 

106The MOU is available at: https://

files.consumerfinance.gov/f/documents/cfpb_ncuamemorandum-of-understanding_2021-01.pdf. 

107The final rule is available at: https://

files.consumerfinance.gov/f/documents/cfpb_roleof-supervisory-guidance_final-rule_2021-01.pdf. 

108The interpretive rule is available at: https://

files.consumerfinance.gov/f/documents/cfpb_ecoainterpretive-rule_2021-03.pdf. 

109The Rescission of the Policy Statement is 

available at: https://files.consumerfinance.gov/f/ 

documents/cfpb_abusiveness-policy-statementconsolidated_2021-03.pdf. 

following a consumer complaint, one 

servicer failed to reverse the 

consequences of these unwanted 

automatic forbearances. 

Second, at one servicer, enrollment in 

the automatic forbearance resulted in 

unenrollment of borrowers in the autodebit program completely. In other 

words, auto-debit did not resume when 

these forbearances ended following 

cancelation of the forbearance or the 

regular termination of the forbearance 

period. This resulted in consumers 

becoming past due on the loan when 

they believed that their payments had 

been automatically debited. 

Consumers could not reasonably 

avoid the injury from either practice 

because the natural disaster forbearance 

was placed on their accounts 

automatically. Even where consumers 

recognized the forbearance was placed 

and contacted their servicer to opt-out, 

the servicers failed to fully reverse the 

consequences of the action. For 

consumers who explicitly do not want 

a natural disaster forbearance, the 

injuries were not outweighed by 

countervailing benefits to consumers or 

competition. The servicers have ceased 

automatically enrolling consumers in 

natural disaster forbearances. 

2.10.6 Inaccurate Monthly Payment 

Amounts After Servicing Transfer 

Examiners found that servicers 

engaged in an unfair act or practice by 

failing to waive or refund overcharges 

they assessed after loan transfers. In 

previous editions of Supervisory 

Highlights, the Bureau has discussed 

other findings related to inaccurately 

billed amounts after loan transfers. 

More specifically, consumers had 

enrolled in Income-Based Repayment 

(IBR) plans that lowered their student 

loan payment to a percentage of their 

discretionary income. When the loans 

were transferred to new servicers, they 

did not honor the terms of the IBR plan 

and sent consumers periodic statements 

listing inaccurate payment amounts, 

and in some instances, initiated 

automatic electronic debits in the 

incorrect amount. The servicers notified 

consumers of the error but did not 

refund or offer to refund any 

overpayments. 

The conduct caused or was likely to 

cause substantial injury to consumers 

because the servicers required payments 

in excess of the amount required under 

the terms of the consumers’ IBR plans. 

Consumers could not reasonably avoid 

the injury because they relied on the 

servicers’ calculations and 

representations in the periodic 

statements. Further, the servicers did 

not provide refunds to consumers if 

they requested refunds of the 

overpayments. The injury from this 

activity is not outweighed by the 

countervailing benefits to consumers or 

competition. For example, the benefits 

to consumers or competition from 

avoiding the cost of better monitoring of 

servicing transfers between entities 

would not outweigh the substantial 

injury to consumers. In response to the 

examination findings, these servicers 

added additional controls to their loan 

onboarding process. 

2.10.7 Failure To Honor Payment 

Allocation Instructions 

Most servicers handle multiple 

student loans for one borrower in 

combined student loan accounts. 

Servicers bill borrowers for the sum of 

the minimum monthly payments for 

each loan. 

Examiners found that servicers 

engaged in an unfair practice by failing 

to follow borrowers’ explicit standing 

instructions regarding payment 

allocation.105

Examiners found that certain accounts 

contained at least one incorrectly 

applied payment. The failure to follow 

payment instructions resulted in 

borrowers paying more over the life of 

their loans or experiencing lost or 

delayed borrower benefits, such as cosigner release. Consumers were unable 

to reasonably avoid the injury because 

they relied on the servicers’ 

representation that they would allocate 

payments in accordance with the 

instructions provided. Finally, the 

injury from these errors is not 

outweighed by the countervailing 

benefits to consumers or competition. In 

response to these findings, services 

implemented new training and 

additional monitoring of payment 

allocation instructions. 

3. Supervisory Program Developments 

3.1.1 CFPB and NCUA Enter Into a 

MOU 

The CFPB and the National Credit 

Union Administration (NCUA) 

announced a Memorandum of 

Understanding (MOU) agreement to 

improve coordination between the 

agencies related to the consumer 

protection supervision of credit unions 

with over $10 billion in assets.106

The MOU better facilitates 

coordinated examinations to reduce 

redundancy and unnecessary overlap. 

CFPB and NCUA will also share 

information on training activities and 

content. Finally, the MOU will permit 

both agencies to share information 

related to supervisory activities and 

potential enforcement actions. 

3.1.2 CFPB Issues Final Rule on the 

Role of Supervisory Guidance 

On January 19, 2021, the CFPB issued 

a final rule regarding the Bureau’s use 

of supervisory guidance for its 

supervised institutions.107 The rule 

codifies the statement, with 

amendments, that the Bureau and other 

Federal financial regulatory agencies 

issued in September 2018, which 

clarified the differences between 

regulations and supervisory guidance. 

The final rule states that unlike a law or 

regulation, supervisory guidance does 

not have the force and effect of law and 

the Bureau does not take enforcement 

actions or issue supervisory criticisms 

based on non-compliance with 

supervisory guidance. Rather, 

supervisory guidance outlines 

supervisory expectations and priorities, 

or articulates views regarding 

appropriate practices for a given subject 

area. 

The Bureau collaborated closely with 

other Federal financial regulatory 

agencies in this rulemaking, including 

by issuing a joint proposal for public 

comment. 

3.1.3 CFPB Issues Interpretive Rule 

On March 9, 2021, the Bureau issued 

an interpretive rule clarifying that the 

prohibition against sex discrimination 

under ECOA and Regulation B includes 

sexual orientation discrimination and 

gender identity discrimination.108 This 

prohibition also covers discrimination 

based on actual or perceived 

nonconformity with traditional sex- or 

gender-based stereotypes, and 

discrimination based on an applicant’s 

social or other associations. 

3.1.4 CFPB Rescinds Its Statement of 

Policy on Abusive Acts or Practices 

On March 11, 2021, the Bureau 

announced that it has rescinded its 

January 24, 2020 policy statement, 

‘‘Statement of Policy Regarding 

Prohibition on Abusive Acts or 

Practices.’’ 109


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36122 Federal Register / Vol. 86, No. 128 / Thursday, July 8, 2021 / Notices 

110The rescinded policies include: Statement on 

Bureau Supervisory and Enforcement Response to 

COVID–19 Pandemic (March 26, 2020); Statement 

on Supervisory and Enforcement Practices 

Regarding Quarterly Reporting Under the Home 

Mortgage Disclosure Act (March 26, 2020); 

Statement on Supervisory and Enforcement 

Practices Regarding CFPB Information Collections 

for Credit Card and Prepaid Account Issuers (March 

26, 2020); Statement on Supervisory and 

Enforcement Practices Regarding the Fair Credit 

Reporting Act and Regulation V in Light of the 

CARES Act (April 1, 2020); Statement on 

Supervisory and Enforcement Practices Regarding 

Certain Filing Requirements Under the Interstate 

Land Sales Full Disclosure Act (ILSA) and 

Regulation J (April 27, 2020); Statement on 

Supervisory and Enforcement Practices Regarding 

Regulation Z Billing Error Resolution Timeframes in 

Light of the COVID–19 Pandemic (May 13, 2020); 

Statement on Supervisory and Enforcement 

Practices Regarding Electronic Credit Card 

Disclosures in Light of the COVID–19 Pandemic 

(June 3, 2020). 

111The rescission also announces that the Bureau 

does not intend to continue to provide any 

flexibilities afforded entities in specific sections of 

certain interagency statements. More information is 

available at: https://www.consumerfinance.gov/ 

about-us/newsroom/cfpb-rescinds-series-of-policystatements-to-ensure-industry-complies-withconsumer-protection-laws/. 

112CFPB Bulletin 2021–01 is available at: https:// 

files.consumerfinance.gov/f/documents/cfpb_

bulletin_2021-01_changes-to-types-of-supervisorycommunications_2021-03.pdf. 

113The Compliance Bulletin is available at: 

https://files.consumerfinance.gov/f/documents/ 

cfpb_bulletin-2021-02_supervision-andenforcement-priorities-regarding-housing_

WHcae8E.pdf. 

114The interim final rule is available at: https:// 

files.consumerfinance.gov/f/documents/cfpb_debt_

collection-practices-global-covid-19-pandemic_

interim-final-rule_2021-04.pdf. Information about 

the CDC’s eviction moratorium is available at: 

https://www.cdc.gov/coronavirus/2019-ncov/more/ 

pdf/CDC-Eviction-Moratorium-03292021.pdf. 

115The consent order can be found at: https://

files.consumerfinance.gov/f/documents/cfpb_tdbank-na_consent-order_2020-08.pdf. 

The Bureau intends to exercise its 

supervisory and enforcement authority 

consistent with the full scope of its 

statutory authority under the DoddFrank Act as established by Congress. 

3.1.5 CFPB Rescinds Series of Policy 

Statements 

On March 31, 2021, the Bureau 

announced it is rescinding seven policy 

statements issued last year that 

provided temporary flexibilities to 

financial institutions in consumer 

financial markets, including mortgages, 

credit reporting, credit cards and 

prepaid cards.110 The seven rescissions, 

effective April 1, provide guidance to 

financial institutions on complying with 

their legal and regulatory obligations. 

With the rescissions, the CFPB provided 

notice that it intends to exercise the full 

scope of the supervisory and 

enforcement authority provided under 

the Dodd-Frank Act.111

3.1.6 Bureau Issues Bulletin Regarding 

Changes to Supervisory 

Communications 

On March 31, 2021, the Bureau issued 

a bulletin to announce changes to how 

its examiners articulate supervisory 

expectations to supervised entities in 

connection with supervisory events.112

The bulletin states that the CFPB will 

continue to issue Matters Requiring 

Attention (MRAs), explains the 

circumstances under which it will do 

so, and announces that the CFPB will 

discontinue use of Supervisory 

Recommendations. This new bulletin 

rescinds and replaces CFPB Bulletin 

2018–01 (September 25, 2018). 

3.1.7 CFPB Compliance Bulletin 

Warns Mortgage Servicers: Unprepared 

Is Unacceptable 

On April 1, 2021, the Bureau warned 

mortgage servicers to take all necessary 

steps to prevent a wave of avoidable 

foreclosures this fall.113 Millions of 

homeowners currently in forbearance 

will need help from their servicers 

when the pandemic-related Federal 

emergency mortgage protections expire 

this summer and fall. Servicers should 

dedicate sufficient resources and staff to 

ensure they are prepared for a surge in 

borrowers needing help. The CFPB will 

closely monitor how servicers engage 

with borrowers, respond to borrower 

requests, and process applications for 

loss mitigation. The CFPB will consider 

a servicer’s overall effectiveness in 

helping consumers when using its 

discretion to address compliance issues 

that arise. 

3.1.8 Bureau Issues Interim Final Rule 

on FDCPA 

On April 19, 2021, the Bureau issued 

an interim final rule in support of the 

Centers for Disease Control and 

Prevention (CDC)’s eviction 

moratorium.114 The CFPB’s rule 

requires debt collectors to provide 

written notice to tenants of their rights 

under the eviction moratorium and 

prohibits debt collectors from 

misrepresenting tenants’ eligibility for 

protection from eviction under the 

moratorium. The CDC established the 

eviction moratorium to protect the 

public health and reduce the spread of 

the Coronavirus. Debt collectors who 

evict tenants who may have rights under 

the moratorium without providing 

notice of the moratorium, or who 

misrepresent tenants’ rights under the 

moratorium, can be prosecuted by 

Federal agencies and State attorneys 

general for violations of the FDCPA and 

are also subject to private lawsuits by 

tenants. 

4. Remedial Actions 

4.1 Public Enforcement Actions 

The Bureau’s supervisory activities 

resulted in and supported the following 

public enforcement actions. 

4.1.1 TD Bank, N.A. 

On August 20, 2020, the Bureau 

announced a settlement with TD Bank, 

N.A. (TD Bank) regarding its marketing 

and sale of its optional overdraft service: 

Debit Card Advance (DCA).115

TD Bank is headquartered in Cherry 

Hill, New Jersey, and operates about 

1,250 locations throughout much of the 

eastern part of the country. The Bureau 

found that TD Bank’s overdraft 

enrollment practices violated EFTA and 

Regulation E by charging consumers 

overdraft fees for ATM and one-time 

debit card transactions without 

obtaining their affirmative consent, and 

that TD Bank engaged in deceptive and 

abusive acts or practices in violation of 

the CFPA. 

The Bureau specifically found that TD 

Bank charged consumers overdraft fees 

for ATM and one-time debit card 

transactions without obtaining their 

affirmative consent in violation of EFTA 

and Regulation E, both after new 

customers opened checking accounts at 

TD Bank branches and after new 

customers opened checking accounts at 

events held outside of bank branches. 

The Bureau further found that when 

describing DCA to new customers, TD 

Bank deceptively claimed DCA was a 

‘‘free’’ service or benefit or that it was 

a ‘‘feature’’ or ‘‘package’’ that ‘‘comes 

with’’ new consumer-checking 

accounts. In fact, TD Bank charges 

customers $35 for each overdraft 

transaction paid through DCA and DCA 

is an optional service that does not 

come with a consumer-checking 

account. When TD Bank enrolled some 

consumers in DCA over the phone, TD 

Bank deceptively described DCA as 

covering transactions unlikely to be 

covered by DCA. In some instances, TD 

Bank engaged in abusive acts or 

practices by materially interfering with 

consumers’ ability to understand DCA’s 

terms and conditions. In some cases, TD 

Bank required new customers to sign its 

overdraft notice with the ‘‘enrolled’’ 

option pre-checked, without mentioning 

the DCA service to the consumer at all; 

enrolled new customers in DCA without 

requesting the customer’s oral 

enrollment decision; and deliberately 

obscured, or attempted to obscure, the 

overdraft notice to prevent a new 


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116A copy of the consent order is available at: 

https://files.consumerfinance.gov/f/documents/ 

cfpb_sigue-corporation_consent-order_2020-08.pdf. 

117A copy of the consent order is available at: 

https://files.consumerfinance.gov/f/documents/ 

cfpb_lobel-financial-corporation_consent-order_

2020-09.pdf. 

118The consent order is available at: https://

files.consumerfinance.gov/f/documents/cfpb_

envios-de-valores-la-nacional-corp_consent-order_

2020-12.pdf. 

customer’s review of their pre-marked 

‘‘enrolled’’ status in DCA. 

To provide relief for consumers 

affected by TD Bank’s unlawful 

overdraft enrollment practices, the 

Bureau’s consent order requires TD 

Bank to provide an estimated $97 

million in restitution to about 1.42 

million consumers. TD Bank must also 

pay a civil money penalty of $25 

million. The consent order also requires 

TD Bank to correct its DCA enrollment 

practices, stop using pre-marked 

overdraft notices to obtain a consumer’s 

affirmative consent to enroll in DCA, 

and adopt policies and procedures 

designed to ensure that TD Bank’s 

furnishing practices concerning 

nationwide specialty consumer 

reporting agencies comply with all 

applicable Federal consumer financial 

laws. 

4.1.2 Sigue Corporation 

On August 31, 2020, the Bureau 

entered into a consent order with Sigue 

Corporation and its subsidiaries, SGS 

Corporation and GroupEx 

Corporation.116 Sigue and its 

subsidiaries, which are all 

headquartered in Sylmar, California, 

provide consumers with international 

money-transfer services, including 

remittance-transfer services. 

The Bureau’s investigation of Sigue 

and its subsidiaries found that between 

2013 and 2019, they violated EFTA and 

the Remittance Transfer Rule. 

Specifically, the Bureau found that 

Sigue and its subsidiaries failed to 

refund transaction fees when they did 

not make funds available by the 

disclosed date of availability, and they 

failed to inform consumers of the 

remedies available for remittance errors. 

When Sigue and its subsidiaries 

investigated remittance errors, they 

failed to report to consumers in writing 

the results of their investigations into 

transaction errors or consumers’ rights 

as required by the Remittance Transfer 

Rule. Sigue and its subsidiaries also 

failed to develop and maintain adequate 

written policies and procedures 

designed to ensure compliance with 

certain Remittance Transfer Rule errorresolution requirements and failed to 

comply with several Remittance 

Transfer Rule disclosure requirements. 

The consent order against Sigue and 

its subsidiaries requires them to pay 

about $100,000 in consumer redress and 

a $300,000 civil money penalty. They 

must also implement and maintain 

written policies and procedures 

designed to ensure compliance with the 

Remittance Transfer Rule and maintain 

a compliance-management system that 

is designed to ensure that their 

operations comply with the Remittance 

Transfer Rule, including conducting 

training and oversight of all agents, 

employees, and service providers, and 

not violating the Remittance Transfer 

Rule in the future. 

4.1.3 Lobel Financial Corporation 

On September 21, 2020, the Bureau 

issued a consent order against Lobel 

Financial Corporation (Lobel), an autoloan servicer based in Anaheim, 

California.117

The Bureau found that Lobel engaged 

in unfair practices with respect to its 

Loss Damage Waiver (LDW) product, in 

violation of the CFPA. When a borrower 

has insufficient insurance, rather than 

force-placing CPI, Lobel places the LDW 

product, which is not itself insurance, 

on borrower accounts and charges a 

monthly premium. The LDW product 

provides that Lobel will pay for the cost 

of covered repairs and, in the event of 

a total vehicle loss, cancel the 

borrower’s debt. The Bureau’s 

investigation found that, since 2012, 

Lobel charged customers LDW 

premiums after they had become tendays delinquent on their auto loans but 

did not provide them with LDW 

coverage. The Bureau also found that 

Lobel charged some customers LDWrelated fees that Lobel had not disclosed 

in its LDW contract. 

The Order requires Lobel to pay 

$1,345,224 in consumer redress to 

approximately 4,000 harmed consumers 

and a $100,000 civil money penalty. 

The consent order also prohibits Lobel 

from failing to provide consumers with 

LDW coverage or similar products or 

services for which it has charged 

consumers or from charging consumers 

fees that are not authorized by its LDW 

contracts. 

4.1.4 Envios de Valores La Nacional 

Corp. 

On December 21, 2020, the Bureau 

announced a consent order with Envios 

de Valores La Nacional Corp. (La 

Nacional) based on the Bureau’s finding 

that La Nacional violated EFTA and the 

Remittance Transfer Rule.118 La 

Nacional is a large remittance transfer 

provider incorporated in New York and 

licensed in 15 states and the District of 

Columbia. La Nacional sent $2.2 billion 

in remittance transfers between 

November 2016 and April 2018 from the 

United States to recipients in several 

countries in Central America, South 

America, the Caribbean, and Africa. 

The Bureau found that, since the 2013 

effective date of the Remittance Transfer 

Rule, La Nacional has engaged in 

thousands of violations of the 

Remittance Transfer Rule. Specifically, 

the Bureau’s investigation found that La 

Nacional violated EFTA and the 

Remittance Transfer Rule by failing to 

honor cancellation requests and failing 

to refund certain fees and taxes when 

funds were not available on time. The 

Bureau also found that La Nacional has 

failed to maintain appropriate error 

resolution policies and procedures, to 

adhere to error resolution requirements, 

and to provide consumers with reports 

of investigation findings. The Bureau 

further found that La Nacional has 

failed to treat international bill pay 

services as remittance transfers and to 

make proper disclosures in numerous 

instances. 

The consent order requires La 

Nacional to pay a $750,000 civil money 

penalty and imposes requirements to 

prevent future violations. Under the 

terms of the consent order, in addition 

to paying a penalty, La Nacional must 

adopt a compliance plan to ensure that 

its remittance transfer acts and practices 

comply with all applicable Federal 

consumer financial laws and the 

consent order. 

5. Signing Authority 

The Acting Director of the Bureau, 

David Uejio, having reviewed and 

approved this document, is delegating 

the authority to electronically sign this 

document to Grace Feola, a Bureau 

Federal Register Liaison, for purposes 

of publication in the Federal Register. 

Dated: July 2, 2021. 

Grace Feola, 

Federal Register Liaison, Bureau of Consumer 

Financial Protection. 

[FR Doc. 2021–14525 Filed 7–7–21; 8:45 am] 

BILLING CODE 4810–AM–P 


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